(Bloomberg) — Shares in Asia advanced following Friday’s rally in US stocks and bonds as investors gave further credence to the idea interest rates are near the cycle peak.
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Equities rose in Australia, Japan and South Korea, while share futures for Hong Kong also gained ground. The S&P 500 enjoyed its best week this year, gaining 5.9%. US futures were little changed Monday.
South Korean stocks traded over 2% higher following news Sunday that the country would ban short-selling. The restriction took effect Monday and will last until the end of June next year, the country’s Financial Services Commission said.
Investors brought forward their forecasts for Federal Reserve rate reductions next year, according to swaps pricing, and have now fully priced in a cut by June. The heightened predictions for rate cuts were partly driven by a weaker expected jobs report Friday and a small increase in US unemployment.
10-year Treasury yields edged higher in early Asian trading after falling nine basis points Friday. The policy-sensitive two-year declined 15 basis points at the end of last week, in a sign of the shifting rate expectations. The Malaysian ringgit and South Korean won led currency advances in Asia, in catch-up to the dollar’s fall Friday.
Forecasts for Fed cuts next year are at odds with the so-called higher-for-longer narrative policymakers have outlined in recent months, setting the market, and Fed officials, on a collision course.
“We think the stock market’s correction is over and that the S&P 500 is back on track to end the year at 4600,” said Ed Yardeni, founder of Yardeni Research Inc., said in a Monday note. Such a level would imply a 5.5% gain by the close of 2023.
Story continues
Bank Results
Shares in Westpac rose after the bank raised its dividend and announced a share buyback plan. DBS Group Holdings Ltd exceeded analyst profit estimates in its third-quarter results released Monday, helped along by commercial lending.
Elsewhere, investors are monitoring the Bank of Japan’s meeting minutes from September and will keep a close eye on a press conference with BOJ Governor Ueda, as markets come back on line after Friday’s holiday. Thailand inflation data and Indonesian third-quarter gross domestic product are among other economic releases slated for Monday.
On Tuesday, investors will be looking to a potential interest rate increase from the Reserve Bank of Australia, after a four-meeting pause in rate hikes. China will release trade data, following comments from Li Qiang, the Chinese premier, who pledged to expand imports in Sunday comments.
In commodities, oil edged higher in Asia after Saudi Arabia and Russia reaffirmed they will stick with oil supply curbs of more than 1 million barrels a day through year-end.
Key events this week:
Bank of Japan meeting minutes, Monday
Thailand CPI, Monday
Indonesia GDP, Monday
Eurozone services PMI, Monday
Australia interest rate decision, Tuesday
China trade data, Tuesday
US trade balance, Tuesday
Dallas Fed President Lorie Logan speaks, Tuesday
Germany CPI, Wednesday
Bank of England Governor Andrew Bailey speaks, Wednesday
China PPI, CPI, Thursday
US initial jobless claims, Thursday
Fed Chair Jerome Powell speaks, Thursday
US consumer confidence, Friday
UK industrial production, GDP, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:30 a.m. Tokyo time. The S&P 500 rose 0.9% Friday
Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.2% Friday
Hang Seng futures rose 1.2%
Japan’s Topix rose 1.4%
Australia’s S&P/ASX 200 rose 0.3%
Euro Stoxx 50 futures rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0726
The Japanese yen fell 0.1% to 149.61 per dollar
The offshore yuan was little changed at 7.2918 per dollar
The Australian dollar was little changed at $0.6511
Cryptocurrencies
Bitcoin rose 1.1% to $35,050.44
Ether rose 1.4% to $1,896.33
Bonds
Commodities
West Texas Intermediate crude rose 0.8% to $81.14 a barrel
Spot gold fell 0.2% to $1,989.10 an ounce
This story was produced with the assistance of Bloomberg Automation.
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