Stocks Rally, Currencies Mix in Cautious Trading: Markets Wrap

(Bloomberg) — Stocks made modest gains while currencies were mixed in Asia on Monday amid cautious trading and lower liquidity with many markets closed for holidays.

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Benchmark stock indexes in China, Japan and South Korea rose less than 1%, with gains just above India. Other markets including Hong Kong, Singapore and Australia were closed.

Risk appetite was limited, as the positive impact of recent US inflation data was partially offset by concern about China’s ability to cope after abandoning the Covid Zero policy.

Amid a new wave of infections, China’s National Health Commission said it would stop publishing daily coronavirus case numbers, complicating the task for investors trying to assess the economic impact.

Meanwhile, data on Friday showed the Federal Reserve’s closely watched gauge of cooling inflation and sluggish consumer spending. A University of Michigan survey showed that next year’s inflation expectations for consumers also fell this month to the lowest level since June 2021.

While US stocks closed higher on Friday, the S&P 500 and the high-tech Nasdaq 100 are still posting weekly losses.

Looking at global stocks over the course of the year, 2022 was the worst annual performance in more than a decade.

“The Fed has been telling us it will tighten financial conditions until there is a recession or something ‘crashes’,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “This is not a great place to own speculative assets, especially the long-term variety which tells me in times like these, cash itself is the best money position.”

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The external yuan and the euro rose while the Australian dollar erased previous losses. Most of the G10 currencies are trading in tight ranges against the dollar.

The yen strengthened against the dollar, even after Bank of Japan Governor Haruhiko Kuroda confirmed that the BoJ’s recent adjustments to yield control were not the beginning of an exit from monetary easing.

Traders are skeptical of Kuroda, and some are betting that the central bank will raise interest rates next year. Japanese 10-year government bond yields jumped seven and a half basis points to 0.445%, compared to the Bank of Japan’s new ceiling of 0.5%.

There was no cash trading Monday for Treasuries, which ended the holiday-cut session lower on Friday. The 10-year benchmark yield rose to its highest level last week since early April, ending Friday near 3.75%.

Elsewhere in the markets, bitcoin was little changed below $17,000 on Monday as the crypto world continued to reel from the FTX crash.

In commodities, everything from oil to gold and copper rose on Friday. Oil posted big weekly gains as Russia said it may cut its crude production in response to price caps imposed by the Group of Seven on its exports, highlighting risks to global supplies in the new year.

Main events this week:

• China Industry Earnings, Tuesday

• US Wholesale Inventories, Tuesday

• Summary of the Bank of Japan’s views at the December 19-20 meeting, Wednesday

• US Initial Jobless Claims, Thursday

• The European Central Bank releases its Economic Bulletin, Thursday

Some of the major movements in the markets:

Stores

• Japan’s Topix Index was up 0.2% as of 3:50 pm Tokyo time

• South Korea’s Kospi Index rose 0.2%.

• The Shanghai Composite Index rose 0.6%.

• India’s Nifty 50 stock rose 1.1%

• The S&P 500 closed 0.6% higher on Friday while the Nasdaq 100 rose 0.3%.

currencies

• The euro rose 0.1 percent to $1.0631

• The Japanese yen rose 0.2 percent to 132.68 per dollar

• The offshore yuan rose 0.2 percent to 6.9865 per dollar

• The Australian dollar remained unchanged at $0.6721

Digital currencies

• Bitcoin rose 0.2% to $16,855.79

• Ether hasn’t changed much at $1,218.58

bonds

goods

• West Texas Intermediate crude rose 2.7 percent to $79.56 a barrel on Friday

• Spot gold rose 0.3 percent to $1,798.20 an ounce on Friday

This story was produced with help from Bloomberg Automation.

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