Equities in Asia Rise as Bitcoin Surges Past $61,000
Equities in Asia Rebound as US Stock Futures Rise
Equities in Asia rose alongside US stock futures in anticipation of the Federal Reserve’s key inflation metric, which will help determine the future of interest rates.
According to the latest report from Bloomberg, Korean and Indian stocks experienced declines, while Chinese equities rebounded after a recent selloff. The yen also saw significant gains against the dollar following Bank of Japan Board Member Hajime Takata’s statement indicating the potential end to the negative interest rate policy. US equity futures also reversed an earlier drop, recovering from overnight losses.
Chinese Equities Set for Biggest Outperformance in Months
Chinese equities have experienced a significant rebound this month and are poised to showcase their biggest outperformance against global stocks since July. This surge follows the implementation of numerous measures by Chinese authorities to boost market sentiment. Investors are now eagerly looking forward to the upcoming meeting of the National People’s Congress, where additional support measures are expected to be announced.
According to Redmond Wong, a strategist at Saxo Capital Markets, the momentum is expected to continue until the commencement of the NPC on March 5. The focus will primarily be on comments from ministers regarding capital market reform and industrial policies. However, Wong has warned of the potential for disappointment due to elevated prices in the market.
Bitcoin Surges Above $60,000, Reflecting New Demand
The price of Bitcoin continues to surge, with an impressive climb above $60,000 for the first time in over two years. This surge is believed to be a result of new demand from exchange traded funds, as the cryptocurrency almost reached $64,000. The previous record high for 2021 was just below $69,000.
Major Market Moves in Asian Stocks
Asian stocks experienced notable movements, including a jump for Japanese lender Aozora Bank Ltd. following a shareholding report from a fund linked to activist investor Yoshiko Murakami. However, shares of Alibaba dropped in Hong Kong after the company introduced its second major cost cuts for cloud services in years.
US Stocks Face Consumer Spending Despite GDP Adjustment
Despite a small revision to US gross domestic product growth in the fourth quarter of 2023, strong consumer spending was observed. This led to declines for US stocks overnight. The report underscores the caution expressed by Fed officials in recent weeks.
Steady Asian Treasuries and Climbing Yen
Treasuries in Asia remained steady after a Wednesday rally, which saw the 10-year yield drop by four basis points and the two-year yield slip by six basis points. Furthermore, the yen saw a notable climb against major currencies, reaching 149.70 per dollar, as investors anticipate a potential narrowing of the interest rate gap between Japan and the US.
Importance of Data in Fed Policy Moves
Recent comments from Fed officials highlight the significance of data in guiding policy moves. New York Fed President John Williams expressed the need for continued battle against inflation, while Atlanta Fed chief Raphael Bostic emphasized the importance of patience in regard to policy adjustments. The core personal consumption or expenditure (PCE) gauge, scheduled for release on Thursday, is expected to validate recent comments by officials, signaling no rush to ease monetary policy.
Market Outlook and Discussion on Fed Cuts
Traders are currently projecting around 80 basis points of easing by year-end, aligning with officials’ expectations expressed in December. This equates to an expected three cuts in 2024, typically incrementing by 25 basis points, highlighting the consistency in the Fed’s historical moves. Comparatively, swaps were previously projecting nearly 150 basis points of cuts for this year at the start of February, illustrating the volatility and changes in market expectations.
Global Glut Affects Profits for Lithium Producer
SQM, the world’s second-largest lithium producer, reported an 82% drop in quarterly profits due to a global glut in battery materials. The company expects prices to remain subdued throughout this year.
Key Economic Reports Due This Week
Several economic reports are due this week in Asia which are expected to have market impacts:
- Fourth-quarter GDP data for India
- Current account balance data in Thailand
- Inflation data for Sri Lanka and Vietnam
Upcoming Key Events to Monitor
Several key events are scheduled for this week:
- Germany CPI and unemployment
- US consumer income, personal consumption expenditures (PCE) deflator, initial jobless claims
- Speeches from Fed officials Austan Goolsbee, Raphael Bostic, and Loretta Mester
- China official Purchasing Managers’ Index (PMI) and Caixin manufacturing PMI
- Eurozone manufacturing PMI, CPI, and unemployment
- Speech by BOE chief economist Huw Pill
- US construction spending, ISM Manufacturing, University of Michigan consumer sentiment
- Speeches from Fed officials Raphael Bostic and Mary Daly
Global Market Overview
Summary of Market Movements:
Stocks:
- S&P 500 futures remain little changed
- Nasdaq 100 futures up 0.1%
- Japan’s Topix remaining stable
- Australia’s S&P/ASX 200 rising 0.5%
- Hong Kong’s Hang Seng up 0.2%
- Shanghai Composite rising by 0.9%
- Euro Stoxx 50 futures up 0.1%
Currencies:
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro remains stable at $1.0833
- The Japanese yen rose by 0.6% to 149.84 per dollar
- The offshore yuan remained stable at 7.2097 per dollar
Cryptocurrencies:
- Bitcoin increased by 2.3% to $61,966.46
- Ether rose by 3.4% to $3,436.11
Bonds:
Commodities:
This story was produced with the assistance of Bloomberg Automation.
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