Stocks extend rally on overpriced bets, yen gains: markets are closing

Stocks extend rally on overpriced bets, yen gains: markets are closing

Stocks advanced in South Korea, Australia and Hong Kong, helping to extend the MSCI Asia Pacific Index’s weekly rally above 4%.

“We’re going to get more fiscal stimulus, more fiscal support from the government, and I think that could ignite some animal spirit in China,” David Zhao, global market analyst for Asia Pacific at Invesco Asset Management, said on Bloomberg TV. . “A lot of the pessimism about Chinese stocks seems to be exaggerated at these levels.”

Stocks were mixed in Japan, as the yen headed for a seven-day winning streak, which would be its best performance since 2018.

Many investors believe the yen’s strength “reflects growing conviction in a hawkish adjustment in the Bank of Japan’s yield curve control policy later this month,” wrote Carl Chamota, chief market strategist at Corpay Cross-Border.

Hideo Hayakawa, a former central bank executive director, said in an interview Thursday that the Bank of Japan will likely adjust its yield curve control program at its policy meeting this month because inflation is stronger than expected. “If they don’t, it doesn’t make sense.”

The dollar fell for the sixth session in a row. That put the currency strength index on pace for its worst week since November. Treasury bonds haven’t changed much in Asia.

The offshore yuan rose. China has ample foreign exchange reserves and will “resolutely” prevent extreme fluctuations in the yuan’s exchange rate, said Liu Guoqiang, deputy governor of the People’s Bank of China, at a press briefing on Friday. Liu added that the currency’s short-term movement cannot be accurately predicted, but it has not deviated from its fundamentals.

Reducing inflation

Wall Street and markets globally got an added dose of encouragement to bid on riskier assets after another US inflation report highlighted the view that price pressures are easing in the world’s largest economy.

the producer price index For final demand, it rose 0.1% in June from a year earlier, the smallest advance since 2020. The numbers came just a day after the data came out. consumer prices at the slowest pace since 2021.

Tech megacaps led the gains on Thursday, with the S&P 500 hitting 4,500 and the Nasdaq 100 rising more than 1.5%. The policy-sensitive 2-year Treasury yield fell 12 basis points, to 4.63%.

Cleansing It has become a buzzword across the trading desk, even though core inflation remains above the central bank’s 2% target. Stocks gained more momentum on the news that St. Louis Federal Reserve Bank President James Bullard – who had called for big gains – has resigned.

However, San Francisco Federal Reserve Bank President Mary Daly told CNBC on Thursday that it’s too early for policymakers to say they’ve done enough to get US inflation back to their target. While the latest consumer price report is “very positive,” the official said she’s in a “wait-and-see mode on that, because I remain intent on bringing inflation down to 2%.”

Federal Reserve Chairman Christopher Waller said he expects the US central bank will need to raise interest rates twice more This year to lower inflation to its target.

“It’s still a lot of work to get to 2%,” Marvin Lew, senior macro analyst at State Street, said on Bloomberg TV. “The higher message will remain for a while longer a message coming out of the Fed and may eventually be appropriate.”

Traders are also awaiting the unofficial start of the second quarter earnings season in the US on Friday. Strategists at Goldman Sachs Group Inc. That US companies be able to meet the consensus-determined minimum. “The S&P 500 earnings season is likely to reveal the ‘less bad of a fright’ trend seen in the first quarter,” said Gina Martin Adams, a strategist at Bloomberg Intelligence.

Back in Asia, the Australian dollar and the country’s government bond yields were flat after the government name of the thing Michel Pollock as the new central bank governor, who will succeed Philip Lowe when his term ends in September. DM


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