Asian Stocks Set to Track Wall Street’s Tech Rally: Markets Wrap

(Bloomberg) — Asian equities were primed for an early advance after a rally in the world’s largest tech stocks lifted US and global shares to new highs ahead of inflation data due later Thursday.

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Equity futures for Japan, Australia and Hong Kong stocks all rose, echoing the bullish pulse on Wall Street on Wednesday that led the S&P 500 and Nasdaq 100 each more than 1% higher to new peaks. The S&P 500 has advanced in each of the past seven sessions, its longest winning streak since November, helping propel a gauge of global equities to a record.

The gains reflected a sharp rally in the final minutes of trade that centered upon the likes of Nvidia Corp. and Apple Inc. The iPhone maker said it aims to ship 10% more new devices after a bumpy 2023.

Treasuries remained fairly stable after a strong $39 billion sale of 10-year bonds, with yields slipping one basis point to 4.28%. Swaps are pricing in two Fed cuts in 2024 — and higher chances of the first coming in September.

An index of dollar strength fell Wednesday. The yen was steady early Thursday after weakening further against the greenback on Wednesday.

As Wall Street geared up for the consumer-price index, Jerome Powell told Congress that the Fed doesn’t need inflation below 2% before cutting rates, while adding officials still have more work to do. He noted the labor market has cooled “pretty significantly.” Powell cited a “good ways to go” on the balance-sheet runoff, and said commercial real estate doesn’t threaten financial stability.

“The key takeaway from his testimony is the Fed’s assessment of the balance of risks is shifting in ways that – if supported and sustained by incoming data – will deliver a rate cut in September,” said Krishna Guha at Evercore.

Bank of England Chief Economist Huw Pill said the timing of a rate cut is still an “open question,” prompting traders to pare bets on August cut.

US Inflation

“Markets remain remarkably calm despite the flood of data this week, including Fed Chair Powell’s testimony, CPI/PPI reports, and the beginning of earnings season,” said Mark Hackett at Nationwide.

The so-called core CPI, which excludes food and energy costs and is seen as a better measure of underlying inflation, is expected to rise 0.2% in June for a second month. That would mark the smallest back-to-back gains since August — a pace more palatable for Fed officials.

“June’s CPI report looks to be another ‘very good’ report that should boost the FOMC’s confidence about the inflation trajectory,” said Anna Wong at Bloomberg Economics. “That should set the stage for the Fed to start cutting rates in September.”

In Asia, a busy day of economic reports includes consumer confidence in Thailand, machine orders in Japan and monetary policy decisions in Malaysia and South Korea. Money supply and new lending figures for China could also be released as soon as today.

Investors will also be looking at any impacts of the China Securities Regulatory Commission’s decision to tighten rules on short selling and high-frequency trades in a bid to crack down on improper arbitrage and maintain market stability.

Oil edged higher in early Thursday trading, while gold was little changed after climbing for a second session on Wednesday.

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