(Bloomberg) — Asian shares rose after the world’s biggest tech stocks surged ahead of U.S. inflation data and pushed global stocks to a record high.
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Japanese and Australian shares rose, mirroring Wall Street’s bullish performance on Wednesday. The S&P 500 and Nasdaq 100 each rose more than 1%, while global stock indexes all rose to record highs. The S&P 500 has risen for the past seven consecutive sessions, its longest winning streak since November.
U.S. stocks accelerated gains in the closing bell, led by Nvidia and Apple. iPhone maker Apple said it aimed to boost shipments of new products by 10% after a turbulent 2023. Nvidia and Taiwan Semiconductor Manufacturing Co. (TSMC), the sole supplier of Apple’s most advanced chips, said their second-quarter sales grew at the fastest pace since 2022.
“Despite a ton of data being released this week, including Fed Chairman Powell’s testimony, the CPI/PPI reports and the start of earnings season, markets have remained surprisingly calm,” said Nationwide’s Mark Hackett.
The so-called core CPI, which excludes food and energy costs and is seen as a more accurate gauge of underlying inflation, is expected to rise for a second straight month, 0.2%, in June, the smallest two-month increase since August and a more palatable pace for Fed officials.
“The June CPI report will be another ‘very good’ report that will boost the FOMC’s confidence in the inflation trajectory,” said Anna Wong of Bloomberg Economics. “This should set the stage for the Fed to start cutting rates in September.”
The swaps are pricing in two Fed rate cuts in 2024, with the first likely to come in September.
The yen, Australian dollar and New Zealand dollar all rose slightly against the U.S. dollar on Thursday, but indicators of dollar strength were little changed.
In Asia, investors will be watching the impact of the China Securities Regulatory Commission’s decision to tighten restrictions on short selling and high-frequency trading to crack down on improper arbitrage and maintain market stability.
Meanwhile, as Wall Street prepares for the release of the consumer price index, Fed Chairman Jerome Powell told Congress that the Fed doesn’t need to cut interest rates below 2% inflation and that officials still have work to do. He noted that the labor market has cooled “quite substantially.” Powell said there is “a long way to go” on reducing the balance sheet and that commercial real estate does not pose a threat to financial stability.
“The key takeaway from his testimony is that the Fed’s assessment of the risk balance is evolving and, if supported and sustained by upcoming data, a rate cut is likely in September,” said Krishna Guha of Evercore ISI.
Bank of England chief economist Hugh Pill said on Wednesday the timing of a rate cut remained an “open question”, leading traders to reduce bets on an August rate cut.
Asia had a packed day of economic reports, including consumer confidence in Thailand, machinery orders in Japan and monetary policy decisions in Malaysia and South Korea. China’s money supply and new lending data could also be released as early as today.
Australian and New Zealand government bonds were little changed in early trading on Thursday, while crude oil rose slightly and gold was little changed after surging for a second time on Wednesday.
Major events this week:
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U.S. Consumer Price Index, Initial Jobless Claims Thursday
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Federal Reserve Presidents Raphael Bostic and Alberto Mussallem to speak Thursday
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China trade, Friday
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University of Michigan Consumer Sentiment Index, U.S. Producer Price Index, Friday
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Citigroup, JPMorgan and Wells Fargo to report earnings on Friday
Some of the key market developments:
stock
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S&P 500 futures were down 0.1% as of 9:43 a.m. Tokyo time.
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Hang Seng futures rose 0.6%
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Nikkei 225 futures (OSE) rose 0.8%
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Japan’s TOPIX rises 0.8%
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Australia’s S&P/ASX 200 rose 0.9%
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Euro Stoxx 50 futures up 0.2%
currency
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The Bloomberg Dollar Spot Index was little changed.
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The euro was little changed at $1.0836
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The Japanese yen rose 0.1% to 161.51 yen to the dollar.
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The offshore yuan was little changed at 7.2900 to the dollar.
Cryptocurrency
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Bitcoin little changed at $57,420.92
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Ether fell 0.2% to $3,089.95.
Bonds
merchandise
This story was produced with assistance from Bloomberg Automation.
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