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Asian stocks showed mixed performance after the S&P 500 hit a record on Fed rate cut hopes
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US payrolls to be revised down by a record 911,000, signalling economic slowdown
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Money markets expect three Federal Reserve rate cuts this year amid inflation data
Global stocks advanced Wednesday as technology shares again powered gains, and on hopes the Federal Reserve will cut interest rates to curb a jobs downturn.
Shares in South Korea were on track for a record close, while stocks in Japan and Hong Kong also moved higher. MSCI’s Asia-Pacific index is within 2% of its record set in 2021, and the global all-country benchmark gained a sixth day to another all-time high. US equity futures advanced. Oil rose after an Israeli attack in Qatar revived fears of an escalating Middle East conflict.
Technology shares including Taiwan Semiconductor Manufacturing Co. and Tencent Holdings Ltd. led gains in the Asian gauge after Oracle Corp. shares surged to a record high in extended trading, following the company’s aggressive outlook for its cloud business.
After fresh signs of a cooling labor market, investors are bracing for inflation reports in the coming days that will help shape next week’s Fed meeting and the path of rate cuts into 2025 — a key test for whether Wall Street can sustain this month’s rally. Money markets are projecting between two to three Fed cuts this year, with US producer and consumer price index data due this week.
“The markets appear to believe it will be enough to protect the US economy from a recession, judging by current risk appetite,” said Kyle Rodda, a market analyst at Capital.com in Melbourne. “A spicy inflation print would complicate this situation and force the Fed into potential nasty trade offs between the labor market and price stability.”
The Kospi advanced as much as 1.7% on Wednesday, with index heavyweights Samsung Electronics Co. and SK Hynix Inc. among the biggest boosts. The gauge is up more than 38% so far this year, driven by enthusiasm for the nation’s ongoing corporate reform campaign as well as an artificial intelligence boom.
China’s consumer prices slipped below zero for the first time in three months, as deflationary pressures persist in an economy at risk of a slowdown.
Traders will be monitoring the potential for joint action by the US and the European Union to pressure Russia into Ukraine talks. President Donald Trump said he’s prepared to join the bloc to impose sweeping new tariffs on China and India — key buyers of Russian oil — and also said he plans to discuss trade with Indian Prime Minister Narendra Modi “in the coming weeks.”
Indian shares rose, with the Nifty 50 index up as much as 0.7%. Infosys Ltd. and Tata Consultancy Services Ltd. contributed the most to its gains.
Fed Meeting
Back in the US, investors will be watching the extent to which the August inflation data affects market expectations for the Fed’s decision next week.
“US PPI is expected to ease slightly, and a result in line with forecasts could reinforce bets on a 50bps Fed cut in September, putting additional pressure on the dollar,” said Dilin Wu, a research strategist at Pepperstone Group Ltd. “That said, last month’s data show that inflationary pressures have yet to fully pass from producers to consumers, making tomorrow’s CPI release even more critical.”
In the run-up to the inflation reports, government data showed US job growth was far less robust in the year through March than previously reported. The number of workers on payrolls will likely be revised down by a record 911,000, or 0.6%, according to the preliminary benchmark revision out Tuesday. The final figures are due early next year.
In the widely followed situation, a judge temporarily blocked President Donald Trump from removing Federal Reserve Governor Lisa Cook, allowing her to remain on the job as she challenges the president’s efforts to oust her over allegations of mortgage fraud.
Stocks
S&P 500 futures rose 0.3% as of 1:50 p.m. Tokyo time
Japan’s Topix rose 0.5%
Australia’s S&P/ASX 200 rose 0.3%
Hong Kong’s Hang Seng rose 1.2%
The Shanghai Composite rose 0.2%
Euro Stoxx 50 futures rose 0.2%
Nasdaq 100 futures rose 0.2%
Australia’s S&P/ASX 200 rose 0.3%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1712
The Japanese yen was little changed at 147.38 per dollar
The offshore yuan was little changed at 7.1213 per dollar
The Australian dollar rose 0.4% to $0.6609
The British pound was little changed at $1.3538
Cryptocurrencies
Bitcoin was little changed at $111,505.89
Ether rose 0.1% to $4,308.7
Bonds
The yield on 10-year Treasuries was little changed at 4.09%
Japan’s 10-year yield was little changed at 1.565%
Australia’s 10-year yield advanced two basis points to 4.28%
Commodities
West Texas Intermediate crude rose 1% to $63.26 a barrel
Spot gold rose 0.4% to $3,642.81 an ounce
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