Japan shines amid stock weakness, bitcoin rebounds: Markets wrap

Japanese stocks climbed to fresh three-decade highs, contrasting with muted trading across the rest of the equity world, as broader sentiment remained cautious ahead of a key US inflation report.

Europe’s Stoxx 600 index edged lower, with mining stocks slipping as iron ore extended a declines amid concerns over demand. US equity futures were confined to narrow ranges. The gains in Japanese stocks helped keep a gauge of Asian equities steady, countering losses seen across China, Hong Kong and Australia.

In individual company news, J Sainsbury Plc dropped after the grocer’s full-year guidance missed analyst estimates. Greggs Plc rallied after sales at the UK’s biggest bakery chain beat expectations.

Investor focus is on Thursday’s US inflation figures as the market seeks clues on the timing of Federal Reserve interest-rate cuts. The cooling in headline inflation is set to reverse in the December data, according to Bloomberg Economics.

“Sentiment may remain in a reserved state, with all eyes on the US inflation data release tomorrow to provide cues for market direction,” said Jun Rong Yeap, a strategist at IG Asia.

Bitcoin rose almost 1% after a bout of volatility that was spurred by speculation the US Securities and Exchange Commission had approved spot-Bitcoin exchange traded funds. The SEC said in a statement that it hadn’t yet given a green light for the ETFs, and said a conflicting post minutes earlier on the regulator’s official X account was untrue.

Treasury 10-year yields and the dollar were steady.

The yen extended its weakness against the dollar as a sharp slowdown in Japanese worker wage growth was seen limiting the Bank of Japan’s ability to exit its ultra-loose policy stance.

Japan’s Topix index closed at its highest since March 1990, supported by the weaker yen and falling bond yields. The Nikkei 225 index jumped 2% after reaching that milestone on Tuesday.

“With the market’s expectation of an early Federal Reserve rate cut receding after the start of the new year, Japanese stocks remained firm on the back of expectations that the yen’s depreciation against the dollar will support corporate earnings,” JPMorgan chief Japan equity strategist Rie Nishihara wrote in a note.

China’s inflation, trade and credit reports are also due in the coming days, and will offer a health check on the world’s no. 2 economy. Geopolitics remained in focus, as China’s US envoy said the country had no room to compromise with those advocating for Taiwan independence.

Elsewhere, oil rose on signs that US crude stockpiles are continuing to drop, and as more attacks on vessels in the Red Sea raised the risk that Middle East supply could be disrupted.

Key events this week:

• US wholesale inventories, Wednesday
• The World Economic Forum’s global risks report is released, Wednesday
• New York Fed President John Williams speaks, Wednesday
• US CPI, initial jobless claims, Thursday
• China CPI, PPI, trade, Friday
• UK industrial production, Friday
• US PPI, Friday
• Some of the biggest US banks report fourth-quarter results, Friday
• Minneapolis Fed President Neel Kashkari speaks, Friday
• ECB chief economist Philip Lane speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.2% as of 8:13 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average fell 0.1%
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0930
• The Japanese yen fell 0.3% to 144.96 per dollar
• The offshore yuan was little changed at 7.1852 per dollar
• The British pound was little changed at $1.2704

Cryptocurrencies

• Bitcoin rose 0.8% to $45,809.9
• Ether rose 2.5% to $2,376.19

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.00%
• Germany’s 10-year yield was little changed at 2.18%
• Britain’s 10-year yield was little changed at 3.79%

Commodities

• Brent crude was little changed
• Spot gold rose 0.1% to $2 032.91 an ounce

This story was produced with the assistance of Bloomberg Automation.