(Bloomberg) — U.S. Treasuries edged higher in Asian trading on Friday, while gold hit a new record after the latest U.S. inflation rate rose at a slightly slower pace than expected.
Most Read Articles on Bloomberg
Markets are digesting a flood of news, from U.S. inflation statistics to the possibility of escalating conflict in the Middle East, and U.S. corporate earnings season is about to begin. Oil prices rose again as Israel braced for a possible attack by Iran or its proxies.
“Overall, there is a lot of uncertainty for markets to respond to at this point,” said Vishnu Varasan, chief economist for Asia (excluding Japan) at Mizuho Bank in Singapore. “Despite rising global interest rates, persistent inflation persists uncomfortably in places. Geopolitical challenges mean that unwanted energy-driven shocks will continue.”
The 10-year Treasury yield fell about 3 basis points on Friday after rising about 22 basis points in the past two sessions. Data on Thursday showed that U.S. producer prices rose less than expected in March after consumer price growth rose more than expected earlier in the week.
The bleakness in some inflation indicators has led market participants to scale back bets that the Federal Reserve will cut interest rates. Swap traders now expect the Fed to cut interest rates by about 43 basis points in 2024, compared with about 65 basis points before the CPI release.
U.S. corporate earnings are also in the spotlight as several major banks, including JPMorgan Chase, Wells Fargo and Citigroup, are scheduled to report on Friday.
Wall Street expects S&P 500 companies’ earnings per share to rise 3.8% annually in the first quarter, according to data compiled by Bloomberg Intelligence. Earnings for the Magnificent Seven, which includes Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia Corp., Meta Platforms Inc. and Tesla Inc., rose 38% in the first quarter. It is expected that According to BI, quarterly.
U.S. futures were firm after Thursday’s rise in the S&P 500, with the tech-heavy Nasdaq 100 closing up more than 1.5%. A strong economy is expected to drive higher profit growth for US companies, with higher profit margins from Big Tech likely to be a key driver.
“What’s going to drive the market going forward is not going to be Fed rate cuts, but rather earnings,” said George Ball, chairman of Sanders Morris. “Even in this high interest rate environment, corporate profits have been much stronger than people expected.”
Stock trading in Asia was mixed. Japanese stocks rose, but Australian, Korean, and Hong Kong stocks fell. Chinese counterparts have fluctuated.
Traders will continue to monitor the yen after the currency fell to its lowest level against the dollar since 1990 and Japanese authorities warned they would consider all options to counter the yen’s weakness. . The yen exchange rate was little changed on Friday.
Investors will also keep an eye on the offshore yuan after it rose against the US dollar for the fourth time in five trading sessions. The strengthening follows the People’s Bank of China’s support on Thursday.
producer price
Quincy Crosby, chief global strategist at LPL Financial, said the 11-month high in U.S. producer prices may have reinforced concerns that the economy was still overheating, but that runaway inflation was likely. The company said it eased some concerns about the outlook.
“The slightly weaker-than-expected PPI headline allays market concerns about a broader inflationary attack on supply chain prices in addition to consumer prices,” he said.
New York Fed President Williams said the central bank was making “significant progress” in rebalancing its inflation and employment goals, but added there was no need to cut rates “in the very short term.” Richmond’s Thomas Barkin said the U.S. central bank still had work to do to rein in price pressures and could take its time before cutting interest rates.
This week’s main events:
-
china trade friday
-
University of Michigan Consumer Sentiment, Friday
-
Citigroup, JPMorgan and Wells Fargo are scheduled to report earnings on Friday.
-
San Francisco Fed President Mary Daley speaks on Friday
The main movements in the market are:
stock
-
S&P 500 futures were little changed as of 11:53 a.m. Tokyo time.
-
Nikkei 225 futures (OSE) rose 0.8%
-
Japan’s TOPIX rose 0.6%
-
Australia’s S&P/ASX 200 falls 0.4%
-
Hong Kong’s Hang Seng fell 1.6%.
-
Shanghai Composite: Almost no change
-
Euro Stoxx50 futures rose 0.6%
-
Nasdaq 100 futures little changed
currency
-
Bloomberg Dollar Spot Index little changed
-
The euro was almost unchanged at $1.0727.
-
The Japanese yen remained almost unchanged at 153.15 yen to the dollar.
-
The offshore yuan was almost unchanged at 7.2551 yuan to the dollar.
-
The Australian dollar was almost unchanged at US$0.6539.
cryptocurrency
-
Bitcoin rose 0.3% to $70,714.13
-
Ether remains almost unchanged at $3,524.58
bond
-
The 10-year Treasury yield fell 2 basis points to 4.56%.
-
Japan’s 10-year bond yield fell 2 basis points to 0.840%.
-
The Australian 10-year bond yield rose three basis points to 4.28%.
merchandise
-
West Texas Intermediate crude rose 0.8% to $85.69 a barrel.
-
Spot gold rose 0.7% to $2,389.07 an ounce.
This article was produced in partnership with Bloomberg Automation.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
