(Bloomberg) — Asian shares rose after gains in the world’s biggest tech stocks helped global shares hit new highs ahead of U.S. consumer price data due later on Thursday.
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Japanese, Australian and Chinese stocks rose following a bullish rally on Wall Street on Wednesday.The dollar fell against most major currencies ahead of the release of a key U.S. inflation reading that could suggest easing price pressures and raise the chances of a rate cut by the Federal Reserve.
Taiwan Semiconductor Manufacturing Co. (TSMC), the sole supplier of Nvidia and Apple’s cutting-edge chips, traded at a record high after reporting its fastest second-quarter sales growth since 2022. Sony Group, Tencent Holdings and South Korean chipmaker SK Hynix traded at their highest prices since 2000, helping lift regional stock indexes.
The S&P 500 and Nasdaq 100 each rose more than 1%, while global stock indexes both rose to record highs, boosted by gains in the likes of Nvidia and Apple. iPhone maker Apple said it aims to increase shipments of new products by 10% after a turbulent 2023. The S&P 500 has risen for the past seven consecutive sessions, its longest winning streak since November.
“Despite a ton of data being released this week, including Fed Chairman Powell’s testimony, the CPI/PPI reports and the start of earnings season, markets have remained surprisingly calm,” said Nationwide’s Mark Hackett.
The so-called core CPI, which excludes food and energy costs and is seen as a more accurate gauge of underlying inflation, is expected to rise for a second straight month, 0.2%, in June, the slowest two-month increase since August but a pace seen as acceptable to Fed officials.
“The June CPI report will be another ‘very good’ report that will boost the FOMC’s confidence in the inflation trajectory,” said Anna Wong of Bloomberg Economics. “This should set the stage for the Fed to start cutting rates in September.”
The swaps are pricing in two Fed rate cuts in 2024, with the first likely to come in September.
In Asia, investors will be focusing on the impact of the China Securities Regulatory Commission’s decision to tighten restrictions on short selling and high-frequency trading to crack down on arbitrage trading and maintain market stability. Sentiment towards Chinese stocks has worsened ahead of China’s third plenary session next week.
Meanwhile, Chairman Jerome Powell told Congress that the Fed does not need inflation to fall below 2% before it cuts interest rates and that officials still have work to do. He noted that the labor market has cooled “quite substantially.” Powell said there is “a long way to go” on reducing the balance sheet and that commercial real estate does not pose a threat to financial stability.
“The key takeaway from his testimony is that the Fed’s assessment of the risk balance is evolving and, if supported and sustained by upcoming data, a rate cut is likely in September,” said Krishna Guha of Evercore ISI.
Bank of England chief economist Hugh Pill said on Wednesday the timing of a rate cut remained an “open question”, leading traders to reduce bets on an August rate cut.
Meanwhile, the Bank of Korea kept its policy rate unchanged on Thursday, seeking evidence that inflation continues to subside. Asian economic reports on Thursday include Thailand’s consumer confidence and Malaysia’s monetary policy decision. China’s money supply and new lending data are also likely to be released on Thursday.
Signs of rising demand combined with a broader market mood of risk appetite helped oil prices rise for a second straight day, while gold prices rose for a third straight day.
Major events this week:
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U.S. Consumer Price Index, Initial Jobless Claims Thursday
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Federal Reserve Presidents Raphael Bostic and Alberto Mussallem to speak Thursday
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China trade, Friday
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University of Michigan Consumer Sentiment Index, U.S. Producer Price Index, Friday
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Citigroup, JPMorgan and Wells Fargo to report earnings on Friday
Some of the key market developments:
stock
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S&P 500 futures were little changed as of 1:55 p.m. Tokyo time.
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Japan’s TOPIX rises 0.8%
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Australia’s S&P/ASX 200 rose 0.9%
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Hong Kong’s Hang Seng Index rose 1.5%
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The Shanghai Composite Index rose 0.8%
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Euro Stoxx 50 futures up 0.2%
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Nasdaq 100 futures little changed
currency
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The Bloomberg Dollar Spot Index was little changed.
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The euro was little changed at $1.0836
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The Japanese yen remained unchanged at 161.69 yen to the dollar.
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The offshore yuan was little changed at 7.2870 to the dollar.
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The Australian dollar rose 0.2% to $0.6758.
Cryptocurrency
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Bitcoin rose 0.6% to $57,745.81.
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Ether fell 0.4% to $3,084.76.
Bonds
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The yield on the 10-year Treasury note was little changed at 4.29%.
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Japan’s 10-year government bond yield remained unchanged at 1.080%
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Australia’s 10-year government bond yield rose 3 basis points to 4.37%.
merchandise
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West Texas Intermediate crude rose 0.8% to $82.75 a barrel.
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Spot gold rose 0.4% to $2,381.53 an ounce.
This story was produced with assistance from Bloomberg Automation.
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