Markets in Japan, Australia, and South Korea edged higher, reflecting a cautiously positive sentiment. In contrast, Chinese indices opened slightly lower after a strong rally on Wednesday fueled by speculation of additional economic stimulus from Beijing. Contracts for US equities also saw modest gains after a midweek dip in major indices—the S&P 500 and Nasdaq 100.
Despite the brief optimism surrounding potential stimulus, investor sentiment remained tempered. Winnie Wu, China equity strategist at Bank of America Securities, voiced concerns on Bloomberg Television about ongoing frustrations in the market. “There are increased concerns and frustrations,” Wu said, highlighting the short-term focus of investors. “The potential for further support and the prospect of US tariffs on China mean even long-term investors are focusing on the next three to six months, or even three to six weeks.”
Bond yields in Australia and New Zealand followed the lead of US Treasuries, which saw a sharp decline on Wednesday. The benchmark 10-year Treasury yield fell to 4.22% as investors sought refuge in safe assets. However, Asian trading of Treasuries paused Thursday in observance of the Thanksgiving holiday in the US.
The Japanese yen, which had surged by over 1% on Wednesday to its strongest level since October, softened on Thursday, falling by 0.2% to 151.41 per dollar. This pullback reflected a recalibration of market expectations regarding potential action by the Bank of Japan (BOJ). Speculation continues to mount that the BOJ may raise interest rates in December, but the wide interest rate differentials between Japan and the US remain a limiting factor for the yen’s strength.
“The Japanese currency is unlikely to trade below 150 for any significant amount of time given still-wide interest rate differentials that continue to favor the dollar,” wrote Win Thin, global head of markets strategy at Brown Brothers Harriman & Co., in a note.
Other currencies saw mixed movements:
- The Mexican peso rose, buoyed by talks between President-elect Donald Trump and Mexico’s President Claudia Sheinbaum, signaling potential cooperation on key issues.
- The South Korean won weakened after an unexpected 25-basis-point rate cut by the Bank of Korea, lowering its benchmark rate to 3%.
Back in the US, fresh economic data provided insights into inflation and growth trends:
- The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, rose 2.8% year-over-year in October, aligning with expectations.
- Separate reports highlighted robust economic expansion, supporting the Federal Reserve’s cautious stance on interest rate cuts.
Quincy Krosby of LPL Financial noted the persistent challenges in managing inflation. “The last mile towards price stability has been stymied by still ‘sticky’ inflation and bumps along the road,” Krosby remarked, suggesting that the Fed is likely to maintain its higher-for-longer rate policy as long as the labor market stays resilient.
The Biden administration is reportedly considering stricter controls on semiconductor equipment and AI memory chip exports to China. These potential measures could impact global tech supply chains and US-China trade relations
Commodities experienced mixed fortunes:
- Gold and silver prices dipped, reflecting muted demand amid stable market conditions.
- Oil prices remained flat as traders awaited signals from OPEC+ on production adjustments. A decision to delay production increases appears likely, according to sources familiar with the group’s discussions.
In the cryptocurrency market, Bitcoin maintained its strength, trading near $96,000 after a midweek rally. Ether was little changed, hovering at $3,634.
Several key events are expected to shape market sentiment in the coming days:
- Thursday: Eurozone consumer confidence data.
- Friday: Eurozone Consumer Price Index (CPI) release and an ECB survey on consumer expectations for October.
- Friday: “Black Friday,” marking the traditional start of the US holiday shopping season, which could provide insights into consumer sentiment and retail sector performance.
Market Summary
Stocks:
- S&P 500 futures: +0.1%
- Nikkei 225 futures: +0.5%
- Japan’s Topix: +0.5%
- Australia’s S&P/ASX 200: +0.7%
- Hong Kong’s Hang Seng: -1%
- Shanghai Composite: Flat
- Euro Stoxx 50 futures: +0.4%
Currencies:
- Bloomberg Dollar Spot Index: Stable
- Euro: $1.0559 (unchanged)
- Japanese yen: 151.41 per dollar (-0.2%)
- Offshore yuan: 7.2469 per dollar (unchanged)
- Australian dollar: $0.6505 (+0.1%)
Cryptocurrencies:
- Bitcoin: $96,310.53 (unchanged)
- Ether: $3,634.18 (-0.1%)
Bonds:
- Japan’s 10-year yield: 1.050% (-1 basis point)
- Australia’s 10-year yield: 4.38% (-4 basis points)
Commodities:
- WTI crude: Stable
- Spot gold: $2,628.78 (-0.3%)
