Stocks gain after fresh US data support rate cuts: Markets wrap

Shares rose in Asia after US stocks resumed a rally fueled by fresh data that backed the case for the Federal Reserve to cut interest rates more than currently anticipated.

A gauge of regional equities gained for the third time in four days with benchmarks in Japan, Hong Kong and Taiwan all moving higher. The S&P 500 climbed 1% Thursday, putting the index on course for an eighth week of gains. Treasuries were little changed, while the dollar crept higher against most of its major peers.

US GDP growth was revised lower to a 4.9% annualised reading in the third quarter, missing consensus projections, according to data published Thursday. Personal consumption data also came in softer than economists had anticipated.

The numbers were “in line with the narrative that a cooling economy will keep the Fed on track to cut rates in the not-too-distant future,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley. “That sentiment has played a big role in the market’s recent surge.”

Mainland China benchmarks once again bucked the regional trend, extending a weekly decline, while US stock futures also crept lower.

The yen was little changed after Japanese inflation data for November came in line with forecasts. Bloomberg’s index of dollar rose less than 0.1% after sliding 0.6% Thursday.

The Fed will publish its preferred inflation metric due later Friday, the so-called core personal-consumption expenditures price index, which is expected to hit the central bank’s 2% target. Swaps traders are pricing in around 150 basis points of Fed cuts next year, twice as much as the central bank signaled.

“Consolidation remains the most relevant impulse for a market that is quickly approaching the end of the year,” Ian Lyngen of BMO Capital Markets, wrote in a note to clients. “Next week’s price action will be largely irrelevant with the presumption of limited liquidity and even more limited conviction.”

Traders will be gauging the impact of China’s decision to halt some exports of rare-earth technologies, the latest move in a rift between the Asian nation and the US. China is the world’s dominant supplier of rare earth materials.

In commodities, oil edged higher after a Thursday retreat spurred partly by surging US production, which tempered the threat of Houthi attacks on ships in one of the world’s most important waterways. Gold rose to a three-week high.

Key events this week:

• UK GDP, Friday
• US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 10:45 a.m. Tokyo time
• Nasdaq 100 futures fell 0.3%
• Japan’s Topix rose 0.5%
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng rose 0.4%
• The Shanghai Composite fell 0.2%
• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.1% to $1.0998
• The Japanese yen fell 0.2% to 142.38 per dollar
• The offshore yuan was little changed at 7.1491 per dollar

Cryptocurrencies

• Bitcoin rose 0.4% to $44,171.82
• Ether rose 0.3% to $2,256.46

Bonds

• The yield on 10-year Treasuries was little changed at 3.90%
• Japan’s 10-year yield advanced 2.5 basis points to 0.610%
• Australia’s 10-year yield advanced two basis points to 4.04%

Commodities

• West Texas Intermediate crude rose 0.5% to $74.29 a barrel
• Spot gold rose 0.2% to $2 049.03 an ounce