- https://tmsnrt.rs/2zpUAr4
- Fed’s Waller downplays CPI as just a number
- Beijing lays down property support, COVID steps
- Biden meets Xi at G20 meeting
SYDNEY, Nov 14 (Portal) – Asian stock markets were mixed on Monday as a top US central banker warned investors not to get carried away by an inflation figure, while Chinese stocks rallied on signs of relief to the hard-hit property sector .
A slight absence of US inflation was enough to send 2-year Treasury yields down 33 basis points this week and the dollar down almost 4%, the fourth largest weekly decline since the start of the floating exchange rate era over 50 years ago.
The resulting easing in US financial conditions was not entirely welcomed by the Federal Reserve, however, as Governor Christopher Waller said it would take a series of soft reports for the bank to take its foot off the brakes. Continue reading
Waller added that even with just one inflationary push, markets were way ahead of themselves, although he acknowledged the Fed may now be starting to slow down its rate hike thinking.
Futures are heavily betting on a half point rate hike to 4.25-4.5% in December and then a few quarter points to a peak in the 4.75-5.0% range.
Two-year yields edged up to 4.41% after falling as low as 4.29% on Friday.
“CPI’s downside surprise is consistent with a broad range of indicators pointing to a slowdown in global inflation, which should encourage moderation in the pace of monetary tightening at the Fed and elsewhere,” said Bruce Kasman, head of economic research at JPMorgan.
“This positive message needs to be tempered by the recognition that cutting inflation will be too little for central banks to declare mission accomplished and that further tightening is likely on the way.”
MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.8% after rising 7.7% last week.
Japan’s Nikkei (.N225) slipped 0.6% while South Korea (.KS11) was flat. S&P 500 futures fell 0.3% and Nasdaq futures lost 0.4%.
EUROSTOXX 50 futures were up 0.4%, while FTSE futures were up 0.1%.
EYES ON CHINA
Traders also waited to see if Chinese stocks could continue their big rally after regulators reportedly asked financial institutions to provide more support to stressed property developers. Continue reading
China’s real estate index (.CSI000952) rose 5% in response. Blue chips (.CSI300) rose 1.4%, helped by a series of changes to China’s COVID curbs, although the country reported more cases over the weekend. Continue reading
“It’s hard to see that the case news is anything but negative from an economic perspective, but it’s the symbolism of the move, however small, in the zero-COVID strategy that markets are happily clinging to” said Ray Attrill, head of FX strategy at NAB.
US President Joe Biden is set to meet Chinese leader Xi Jinping in person on Monday for the first time since taking office, with US concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions high on his agenda. Continue reading
News of the COVID rules had prompted a yuan rally to cover short selling last week, adding to overall pressure on the dollar as yields tumbled. The dollar regained some ground early Monday as its index rose 0.4% to 106.870, but remained well below last week’s high of 111.280.
The euro eased slightly to $1.0324 after rising 3.9% last week, while the dollar firmed to 139.27 yen after falling 5.4% last week.
The dollar lost almost as much against the Swiss franc, in part on warnings from the Swiss National Bank that it would use interest rates and foreign exchange purchases to tame inflation. Continue reading
Sterling slipped back to $1.1790 ahead of the UK Chancellor’s autumn statement on Thursday, which is expected to outline tax hikes and spending cuts. Continue reading
Cryptocurrencies remained under pressure as at least $1 billion in customer funds were reported to have disappeared from the collapsed crypto exchange FTX. Continue reading
Bitcoin traded up 1.5% to $16,055 after losing almost 22% last week.
The dollar’s recent drop gave commodities a much-needed boost, with gold remaining at $1,763 an ounce after surging above $100 last week.
Oil futures extended gains on hopes of a pick-up in Chinese demand, with Brent rising 63 cents to $96.62, while US crude rose 56 cents to $89.52 a barrel.
Reporting by Wayne Cole; Edited by Shri Navaratnam
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