Asian Stocks Advance Before Fed Policy Meeting: Markets Wrap
Bloomberg · 14 Dec 2022 826 Views

(Bloomberg) -- Stocks in Asia followed equities on Wall Street higher after US inflation cooled ahead of the Federal Reserve’s policy decision later Wednesday.

Shares in Hong Kong, Japan, South Korea and Australia rose, along with US equity futures, in a sign of increase appetite for riskier assets. Mainland China shares fluctuated.

Still, the moves in Asia’s key country indexes were confined toi around 1%, reflecting a degree of caution that was also seen in the S&P 500 closing below its session highs. Investors are awaiting more hints on the Fed’s path from the decision later Wednesday and Chair Jerome Powell’s briefing.

A dollar gauge traded flat after Tuesday’s decline to the lowest level since June while emerging-market currencies strengthened versus the greenback. The New Zealand dollar fell in a decline that accelerated after the government warned a recession was likely next year.

Australian bonds were higher, led by the rate-sensitive three-year maturity. In the US Tuesday, Treasuries rallied after Powell’s key measure of services prices excluding energy and rents moderated again in November. While price pressures appear to have peaked, headline CPI remains above 7%, suggesting the Fed has more work to do to rein in inflation.

“The market is now anticipating a slower pace of hikes and a moderation of the peak terminal rate in the US,” said Kellie Wood, deputy head of fixed-income at Schroders in Sydney. “We believe the market is fully priced for this interest rate cycle given the level of inflation in the US economy.”

A dovish repricing swept across rates markets on Tuesday. With a half-percentage point move by the Fed notched in, wagers leaned toward a quarter-point increase as early as February. Further out, swaps priced the peak Fed policy rate around 4.85% by May, down from almost 5% ahead of Tuesday’s inflation print. The current Fed policy range is 3.75% to 4%.

Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.

Key events this week:

  • FOMC rate decision and Fed Chair news conference, Wednesday

  • China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday

  • ECB rate decision and ECB President Lagarde briefing, Thursday

  • Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday

  • US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday

  • Eurozone S&P Global PMI, CPI, Friday

Some of the main moves in markets:


  • Futures on the S&P 500 rose 0.3% as of 10:54 a.m. Tokyo time. The S&P 500 gained 0.7%

  • Nasdaq 100 futures rose 0.3%. The Nasdaq 100 gained 1.1%

  • The Topix Index rose 0.4%

  • The S&P/ASX 200 Index rose 0.4%

  • The Hang Seng Index rose 0.7%

  • The Shanghai Composite Index rose 0.1%


  • The Bloomberg Dollar Spot Index was unchanged

  • The euro was unchanged at $1.0633

  • The Japanese yen was little changed at 135.60 per dollar

  • The offshore yuan was little changed at 6.9645 per dollar


  • The yield on 10-year Treasuries was little changed at 3.50%

  • Australia’s 10-year yield declined five basis points to 3.35%


  • West Texas Intermediate crude fell 0.5% to $75.04 a barrel

  • Spot gold was little changed

(Source : Bloomberg) , all rights reserved by original source.