Market Wrap: 11 April 2023

Market Wrap: 11 April 2023

Asian Stocks Climb After Wall Street Ekes Out Gain:

  • Japanese shares up after yen falls on dovish stance from Ueda
  • Australia, Hong Kong equities push higher after Easter holiday

Asian equities rose Tuesday, building on a late recovery that saw US stocks catch bids into the close amid holiday-thinned trading. The dollar edged down after three days of gains and Treasury yields were slightly lower.

Japanese shares led the early advance following the dovish stance of the new Bank of Japan governor, Kazuo Ueda, who signalled that any significant changes to monetary policy may be unlikely for now. The yen steadied after weakening by more than 1% after Ueda spoke on Monday.

South Korea’s Kospi moved higher as the central bank held interest rates unchanged, as expected by economists. The Hong Kong and Australian markets showed strong gains after a long weekend.

Shares in Shanghai fluctuated, with Chinese inflation data in focus. Consumer prices were softer than expectations and deflation in factory-gate prices matched estimates, likely keeping the stimulus option open for policymakers. 

After spending most of the day in the red, the S&P 500 eked out a gain in the final minutes of the session. Volumes were light — more than 20% below the 30-day average — with much of Europe still shuttered for holidays ahead of Tuesday’s reopening. The Nasdaq 100 pared losses into the close, ending marginally lower as an Apple Inc. report that personal computer shipments fell sharply weighed on the tech-heavy benchmark. 

 

The yield on two-year Treasuries eased about four basis points after climbing Monday as traders continued to mark up chances of another quarter-point Fed hike in May. Swap contracts repriced to levels indicating about 80% odds of a quarter-point hike on May 3, up from 75% on Friday. After the Fed set its policy band at 4.75%-5% on March 22, the odds of a May rate hike almost vanished amid a collapse in bank shares after several institutions failed.

Traders upped wagers on a May rate hike in the US ahead of Wednesday’s report on consumer prices, which is expected to show a 0.4% monthly increase in core CPI.  Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. kick off reporting for the banking sector Friday, offering insights on the health of the financial system.

Australian bonds opened lower Tuesday, following declines in Treasuries on Monday as well as losses in a shortened session Friday after a strong US hiring report. The yield on the 10-year bond rose three basis points to 3.21% in Sydney. 

 

In a report Monday, the International Monetary Fund put forward that rates in the US and other industrial countries will revert toward ultra-low levels instead of the 1.5% to 2% real neutral interest rate former US Treasury Secretary Lawrence Summers has suggested.

Elsewhere in markets, oil held most of a recent loss, with West Texas Intermediate trading below $80 a barrel after closing 1.2% lower on Monday. 

Gold was little changed near $2,000 an ounce as investors await more economic data for clues on the Federal Reserve’s next interest-rate moves.

Bitcoin climbed past $30,000 for the first time since June and has gained about 80% so far this year.

Key events this week:

  • China PPI, CPI, Tuesday
  • IMF global financial stability report, Tuesday
  • Chicago Fed’s Austan Goolsbee, Minneapolis Fed’s Neel Kashkari and Philadelphia Fed’s Patrick Harker speak at separate events, Tuesday
  • Canada rate decision, Wednesday
  • US FOMC minutes, CPI, Wednesday
  • Richmond Fed’s Thomas Barkin speaks, Wednesday
  • China trade, Thursday
  • US PPI, initial jobless claim, Thursday
  • US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
  • Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday

 

Source: Bloomberg.com

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