(Bloomberg) — Equities in Asia whipsawed Thursday as investors parsed a weakening yen and the prospect of a further US rate cut next month.
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Shares in Japan, South Korea and Australia rose while those in China and Taiwan fell. Stocks listed in Hong Kong slumped, while its exchange stayed open despite signs of severe weather. US equities were little changed as the post-election rally appeared to stall. The S&P 500 was flat and the tech-heavy Nasdaq 100 dropped 0.2%.
Shares of the region’s chipmakers declined as investors continued to weigh the sector’s outlook after Donald Trump’s win and his pledges for higher tariffs. Taiwan Semiconductor Manufacturing Co., a big component of a major cross-Asia equity index, fell as much as 1%. SK Hynix, a South Korean chipmaker, sank as much as 4.8%.
Chinese equities may remain range-bound given signs from policymakers at last week’s legislative meeting that stimulus measures are probably not going to target a major reacceleration of growth, Kaanhari Singh, head of Asia cross asset strategy for Barclays, said on Bloomberg Television.
“That matters because it looks like China’s fiscal stimulus could be reactive rather than proactive,” Singh said. “The broad dollar higher theme is what has been driving risk in the region across FX and equities.”
US consumer price data was in line with expectations on a headline basis, although the annualized three-month core rate picked up. Overall, the numbers were supportive of a potential Fed cut in mid-December, with swaps traders increasing the likelihood to around 80% from about 56% earlier Wednesday.
The nuanced data led short-end bond yields to fall, with the two-year yield dropping five basis points to 4.29%. The 10-year rose for a third day, up two basis points to the highest level since July. Treasury yields were slightly higher across the curve in Asian trading Thursday.
A gauge of the dollar was little changed after advancing Wednesday. The yen fell further against the dollar to the weakest level since July. The drop has taken the yen near levels when Japanese authorities last intervened to prop up its currency, with the nation’s top foreign exchange official warning about the one-sided, sudden moves.
Elsewhere in Asia, China was able to draw more than $40 billion of bids for its first dollar bond issuance since 2021, or 20 times the bonds on offer as domestic investors hunt for higher returns and look to benefit from tax exemptions on such purchases.
Shares of Tencent Holdings rose as much as 2.8% after the Chinese tech giant posted better-than-expected earnings and described green shoots in the economy in the wake of Beijing’s recent stimulus measures.
Australia’s unemployment rate held at 4.1% as expected. Other data set for release includes South Korean money supply and Thai consumer confidence.
Inflation Battle
“A December cut is still in the cards,” said Seema Shah at Principal Asset Management. “A hotter-than-expected inflation number could have convinced the Fed to stand pat at its next meeting.”
Several Fed officials reiterated their deep uncertainty over how far the central bank will need to lower interest rates, highlighting the difficulty policymakers face in trying to determine the right setting to keep the economy on an even keel.
“The in-line CPI print shows that while substantial progress has been made in the fight against elevated inflation, the ‘last mile’ is proving more challenging,” said Josh Jamner at ClearBridge Investments.
Traders will now shift their focus to US PPI data due later Thursday which is expected to show headline and core producer prices for October rose year-over-year.
Bitcoin notched another record high, climbing above $93,000 for the first time, with traders exuberant over Trump’s rhetorical support for crypto. The cryptocurrency was trading around $90,000 in early Asian trading.
In other commodities, oil retreated after a Wednesday gain. Gold edged lower for a fifth session.
Key events this week:
Eurozone GDP, Thursday
US PPI, jobless claims, Thursday
Fed speakers include Jerome Powell, John Williams and Adriana Kugler, Thursday
China retail sales, industrial production, Friday
US retail sales, Empire manufacturing, industrial production, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 10:38 a.m. Tokyo time
Japan’s Topix rose 0.6%
Australia’s S&P/ASX 200 rose 0.4%
Hong Kong’s Hang Seng fell 0.2%
The Shanghai Composite fell 0.4%
Euro Stoxx 50 futures rose 0.3%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.0553
The Japanese yen fell 0.3% to 155.87 per dollar
The offshore yuan was little changed at 7.2489 per dollar
Cryptocurrencies
Bitcoin rose 1.4% to $89,891.51
Ether rose 0.8% to $3,180.02
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.47%
Japan’s 10-year yield advanced 1.5 basis points to 1.055%
Australia’s 10-year yield advanced four basis points to 4.70%
Commodities
West Texas Intermediate crude fell 0.2% to $68.28 a barrel
Spot gold fell 0.2% to $2,567.05 an ounce
This story was produced with the assistance of Bloomberg Automation.
