Equities climb, while dollar recovers against the yen and pound at the start of a crucial week for the US rate outlook
02 December 2024 - 08:04
byKevin Buckland
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A man walks past an electronic screen outside a brokerage in Tokyo, Japan March 21, 2024. File photo: REUTERS
Tokyo — Asian stocks climbed on Monday, buoyed by record high closes on Wall Street, while the dollar bounced back from multiweek lows against the yen and pound in a crucial week for the US interest rate outlook.
Chinese shares got an additional boost from a robust reading in a private manufacturing survey on Monday, confirming strength in the official data on manufacturing from the weekend.
Incoming US president Donald Trump provided the dollar support by warning the Brics emerging nations against trying to replace the greenback with any other currency.
“There’ll be two drivers of market volatility this month. The first remains the impact of Trump, especially future fiscal settings and, increasingly, looming trade wars,” said Kyle Rodda, senior financial markets analyst at Capital.com.
“The second is what the US Federal Reserve does with policy this month,” Rodda said. “If the Fed delivers [a cut] and provides sufficiently dovish guidance, it may green light some sort of ‘Santa Rally’.”
The euro was heavy due to the risk of an imminent collapse of the French government, with Prime Minister Michel Barnier confronted with a Monday deadline to make more budget concessions or face a no-confidence vote.
Hong Kong’s Hang Seng gained 0.9%, and mainland Chinese blue chips added 0.6% by 1.53am GMT.
The Caixin/S&P Global manufacturing PMI rose to 51.5 in November from 50.3 the previous month, the highest since June and beating analysts’ forecasts of 50.5 in a Reuters poll.
The reading largely echoed an official survey on Saturday, which showed manufacturing activity expanded modestly, suggesting a blitz of stimulus is finally trickling through the world’s second-largest economy.
Australia’s stock benchmark gained 0.3%, inching back towards last week’s record high. South Korea’s Kopsi advanced 0.3%.
Japan’s Nikkei declined 0.3%, dragged down by a 3.6% drop for heavily weighted Fast Retailing, owner of the Uniqlo brand. The broader Topix index, by contrast, climbed 0.4%.
Japanese government bond yields climbed to a 16-year high after Bank of Japan governor Kazuo Ueda said in an interview published at the weekend that another rate hike was “approaching in the sense that economic data is on track”.
Market-implied odds of a quarter-point increase this month stood at around 64%.
The yield on two-year JGBs jumped three basis points (bps) to 0.625%, the highest since November of 2008.
However, Ueda also told the Nikkei that the central bank wants to scrutinise developments in the US economy as there was a “big question mark” on its outlook, such as the fallout from Trump’s proposed tariff hikes.
The dollar index, which measures the currency against six major rivals, rose 0.2% to 106.23.
The dollar climbed 0.5% to ¥150.53, bouncing back from Friday’s low of ¥149.47, a level last seen on October 21.
Sterling slid 0.4% to $1.2690, after touching $1.2750 on Friday for the first time since Nov. 13.
The euro sank 0.4% to $1.0530. On Friday, it reached the highest since Nov. 20 at $1.0597.
France’s far-right National Rally legislator Marine le Pen said on Sunday that Barnier has until Monday to make further budget concessions to avoid a no-confidence motion that would trigger the government’s collapse.
Meanwhile, the outlook for monetary policy provided another weight on the single currency.
The European Central Bank is seen cutting rates this month, with markets implying a 27% chance it might even ease by 50bps on December 12.
The Federal Reserve is also in focus, with Friday’s monthly payrolls report set to inform central bank thinking about whether to cut rates again on December 18.
A number of Fed officials are due to speak this week, including Fed chair Jerome Powell on Wednesday. Traders currently put the odds of a quarter-point reduction at about 66%.
In a holiday-shortened session on Friday, the S&P 500 and Nasdaq added 0.6% and 0.8% respectively to close at record highs. S&P 500 futures pointed to a slightly lower reopen for Monday.
In cryptocurrencies, ether rose towards Sunday’s nearly six month peak at $3,748, last trading 3.7% higher at $3,726.
Bitcoin edged up to $97,863, inching back towards the record high from November 22 at $99,830.
Gold sank 0.7% to $2,635.50 under pressure from the strong dollar.
Oil prices edged up, supported by the Chinese manufacturing data, and as Israel resumed attacks on Lebanon despite a ceasefire agreement.
Brent crude futures climbed 11 cents to $71.95 a barrel, while US West Texas Intermediate (WTI) crude was at $68.14 a barrel, up 14c.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Wall Street record lifts Asian shares
Equities climb, while dollar recovers against the yen and pound at the start of a crucial week for the US rate outlook
Tokyo — Asian stocks climbed on Monday, buoyed by record high closes on Wall Street, while the dollar bounced back from multiweek lows against the yen and pound in a crucial week for the US interest rate outlook.
Chinese shares got an additional boost from a robust reading in a private manufacturing survey on Monday, confirming strength in the official data on manufacturing from the weekend.
Incoming US president Donald Trump provided the dollar support by warning the Brics emerging nations against trying to replace the greenback with any other currency.
“There’ll be two drivers of market volatility this month. The first remains the impact of Trump, especially future fiscal settings and, increasingly, looming trade wars,” said Kyle Rodda, senior financial markets analyst at Capital.com.
“The second is what the US Federal Reserve does with policy this month,” Rodda said. “If the Fed delivers [a cut] and provides sufficiently dovish guidance, it may green light some sort of ‘Santa Rally’.”
The euro was heavy due to the risk of an imminent collapse of the French government, with Prime Minister Michel Barnier confronted with a Monday deadline to make more budget concessions or face a no-confidence vote.
Hong Kong’s Hang Seng gained 0.9%, and mainland Chinese blue chips added 0.6% by 1.53am GMT.
The Caixin/S&P Global manufacturing PMI rose to 51.5 in November from 50.3 the previous month, the highest since June and beating analysts’ forecasts of 50.5 in a Reuters poll.
The reading largely echoed an official survey on Saturday, which showed manufacturing activity expanded modestly, suggesting a blitz of stimulus is finally trickling through the world’s second-largest economy.
Australia’s stock benchmark gained 0.3%, inching back towards last week’s record high. South Korea’s Kopsi advanced 0.3%.
Japan’s Nikkei declined 0.3%, dragged down by a 3.6% drop for heavily weighted Fast Retailing, owner of the Uniqlo brand. The broader Topix index, by contrast, climbed 0.4%.
Japanese government bond yields climbed to a 16-year high after Bank of Japan governor Kazuo Ueda said in an interview published at the weekend that another rate hike was “approaching in the sense that economic data is on track”.
Market-implied odds of a quarter-point increase this month stood at around 64%.
The yield on two-year JGBs jumped three basis points (bps) to 0.625%, the highest since November of 2008.
However, Ueda also told the Nikkei that the central bank wants to scrutinise developments in the US economy as there was a “big question mark” on its outlook, such as the fallout from Trump’s proposed tariff hikes.
The dollar index, which measures the currency against six major rivals, rose 0.2% to 106.23.
The dollar climbed 0.5% to ¥150.53, bouncing back from Friday’s low of ¥149.47, a level last seen on October 21.
Sterling slid 0.4% to $1.2690, after touching $1.2750 on Friday for the first time since Nov. 13.
The euro sank 0.4% to $1.0530. On Friday, it reached the highest since Nov. 20 at $1.0597.
France’s far-right National Rally legislator Marine le Pen said on Sunday that Barnier has until Monday to make further budget concessions to avoid a no-confidence motion that would trigger the government’s collapse.
Meanwhile, the outlook for monetary policy provided another weight on the single currency.
The European Central Bank is seen cutting rates this month, with markets implying a 27% chance it might even ease by 50bps on December 12.
The Federal Reserve is also in focus, with Friday’s monthly payrolls report set to inform central bank thinking about whether to cut rates again on December 18.
A number of Fed officials are due to speak this week, including Fed chair Jerome Powell on Wednesday. Traders currently put the odds of a quarter-point reduction at about 66%.
In a holiday-shortened session on Friday, the S&P 500 and Nasdaq added 0.6% and 0.8% respectively to close at record highs. S&P 500 futures pointed to a slightly lower reopen for Monday.
In cryptocurrencies, ether rose towards Sunday’s nearly six month peak at $3,748, last trading 3.7% higher at $3,726.
Bitcoin edged up to $97,863, inching back towards the record high from November 22 at $99,830.
Gold sank 0.7% to $2,635.50 under pressure from the strong dollar.
Oil prices edged up, supported by the Chinese manufacturing data, and as Israel resumed attacks on Lebanon despite a ceasefire agreement.
Brent crude futures climbed 11 cents to $71.95 a barrel, while US West Texas Intermediate (WTI) crude was at $68.14 a barrel, up 14c.
Reuters
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