Asian Shares Gain As US CPI Boosts Stocks, Bonds: Markets Wrap
Shares in Japan and Australia climbed along with Hong Kong equity futures, following an 0.8% gain for the S&P 500 and a 1.5% rally for the Nasdaq 100
Asian equities rose after cooling US inflation data backed the case for Federal Reserve interest-rate cuts and calming tech jitters supported American stocks.
Shares in Japan and Australia climbed along with Hong Kong equity futures, following an 0.8% gain for the S&P 500 and a 1.5% rally for the Nasdaq 100 on Thursday.
Gains for tech were helped by a solid outlook from giant Micron Technology Inc., easing concerns over artificial intelligence spending and tech valuations. Futures contracts for US equities slipped, pushed lower by shares in Nike Inc., which fell around 10% in late trading on further weakness in China.
US inflation took center stage as traders looked past data caveats tied to the recent government shutdown, focusing instead on the slowest increase in consumer prices since early 2021. The cooling print boosted investor confidence and bolstered Treasuries on renewed expectations of Fed rate cuts.
“November’s inflation undershoot has armed Fed doves with strong ammunition,” said Seema Shah, chief global strategist at Principal Asset Management. “Distortions can’t be ruled out, but the sharp drop in annual inflation leaves the Fed with little excuse not to respond to rising unemployment."
Chicago Fed President Austan Goolsbee described the CPI report as “good” but said he wanted to see more data showing inflation was coming down.
Because of the shutdown, the Bureau of Labor Statistics couldn’t collect prices throughout October and started sampling later than usual in November. For policymakers, what the latest consumer price index means depends on how skeptical they are about its accuracy, said Jim Baird at Plante Moran Financial Advisors.
“On the surface, the news on inflation was good and may help to clear the path for further Fed easing. But enough questions will be raised to keep a January cut from being a slam dunk,” he said.
For its next policy decision in January, swaps are implying just about 20% odds of a cut. A reduction is fully priced in by mid-2026. Traders are also sticking with their call that the Fed lowers rates twice next year.
Geopolitics remained in the spotlight. A proposed $11 billion arms sale from the US to Taiwan drew an angry response from China. Tensions with Venezuela and Russia supported oil prices.
The yen edged lower Friday ahead of a Bank of Japan interest rate decision. The central bank is forecast to raise its benchmark rate to the highest level in three decades.
Elsewhere in Asia, traders will be focused on Malaysia trade data, foreign direct investment in China and private sector credit in Australia.
On Thursday, a busy day for global monetary policy decisions saw German and UK bonds underperforming US peers after the European Central Bank and Bank of England issued hawkish signals on the outlook for their rate paths.
The bullish signals in stock and bond markets failed to help cryptocurrencies. Bitcoin traded around $85,000, slightly above the two-week low it touched in Thursday’s session. Gold and silver retreated Thursday after gains in the prior session.
US inflation took center stage as traders looked past data caveats tied to the recent government shutdown, focusing instead on the slowest increase in consumer prices since early 2021
Corporate Highlights:
TikTok Chief Executive Officer Shou Chew told employees that the social media app’s parent company, ByteDance Ltd., signed binding agreements to create a US joint venture majority-owned by American investors.
Apple Inc. is making changes to its iOS software in Japan to comply with a new local law aimed at fostering competition, part of broader efforts by the iPhone maker to adapt to regulations around the world.
The New York Stock Exchange and Nasdaq Inc. said they won’t alter their trading schedules on Dec. 24 and Dec. 26 after President Donald Trump’s executive order to close the federal government on those days.
FedEx Corp. raised the low end of its full-year profit and sales outlook, signaling the company’s efforts to slash costs and streamline its delivery networks are bearing fruit as demand improves.
Key Events This Week
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:18 a.m. Tokyo time
Hang Seng futures rose 0.6%
Japan’s Topix rose 0.5%
Australia’s S&P/ASX 200 rose 0.5%
Euro Stoxx 50 futures rose 1%
Currencies
The Bloomberg Dollar Spot Index was unchanged
The euro was unchanged at $1.1722
The Japanese yen was little changed at 155.69 per dollar
The offshore yuan was little changed at 7.0335 per dollar
Cryptocurrencies
Bitcoin fell 0.1% to $85,494.34
Ether rose 0.1% to $2,831.75
Bonds
The yield on 10-year Treasuries was little changed at 4.13%
Japan’s 10-year yield was little changed at 1.970%
Australia’s 10-year yield was little changed at 4.74%
Commodities
West Texas Intermediate crude fell 0.2% to $56.01 a barrel
Spot gold fell 0.1% to $4,328.07 an ounce
