Stocks set for weekly advance as inflation eases: markets wrap

A benchmark of global stocks headed for a weekly gain amid easing inflationary pressure in the US and expectations for smaller interest rate hikes.

Shares were mostly higher in Asia despite choppy trading, putting a gauge of the region’s equities on course for the highest level since June.

Hong Kong-listed tech companies swung between gains and losses as investors digested a report that China plans to take “golden shares” in the local units of Alibaba and Tencent, a move that may give the government more control of the strategic sector.

Japan’s Topix fell as the outlook for exporters dimmed with the yen’s recent surge. Sentiment was also damped by a slump in Fast Retailing’s shares after its profit missed estimates.

The nation’s 10-year bond yield rose above the Bank of Japan’s 0.5% ceiling amid speculation the BOJ will review the side effects of its ultra-loose monetary policy. The yen was little changed after its 2.5% rally Thursday.

Citigroup expects the Bank of Japan to abolish its yield-curve control program next week, according to Johanna Chua, chief Asia economist.

“Japanese government bond yields are already testing the upper ceiling of the yield cap,” she said on Bloomberg Television. With ongoing “dysfunction” in the Japanese bond market, there may be a case change before Governor Haruhiko Kuroda’s term ends in April, Chua added.

The won trimmed a gain after the Bank of Korea raised its benchmark interest rate in what may be its last hike during its 18-month tightening cycle as economic concerns come to the fore.

Meanwhile, Philippine stocks rose, putting the nation’s benchmark index on course to enter a bull market as the country’s central bank signaled an imminent end to its monetary tightening cycle.

Rates outlook

Treasury yields rose slightly after dropping in the US session. Bond yields declined in Australia and New Zealand, tracking moves in US rates. Traders looked past initial disappointment with an in-line US consumer price index to focus on the idea that aggressive monetary policy may be gradually achieving its desired results.

The swap market is showing less than 50 basis points of tightening priced in for the next two Fed gatherings: a small chance of no move at all in March.

The CPI figures overall show things seem to be going in the right direction, paving the way for the Fed to downshift to a quarter-point hike at its next meeting.

Some US officials have signaled openness to making a 25 basis-point rate increase right at their next meeting, while also stressing the Fed still has more work to do to tame prices — and not anticipating any rate cuts this year.

Elsewhere in markets, oil headed for a weekly gain and gold was set for a fourth weekly advance after breaching the $1 900-an-ounce mark in the wake of the release of the US inflation data.

Key events this week:

• US University of Michigan consumer sentiment, Friday
• Citigroup, JPMorgan, Wells Fargo report earnings, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 2:59 p.m. Tokyo time. S&P 500 rose 0.3%
• Nasdaq 100 futures fell 0.4%. Nasdaq 100 rose 0.5%
• Japan’s Topix index fell 0.3%
• South Korea’s Kospi index rose 0.9%
• Hong Kong’s Hang Seng Index rose 0.2%
• China’s Shanghai Composite Index rose 0.5%
• Australia’s S&P/ASX 200 rose 0.7%

Currencies

• Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.2% to $1.0836
• The Japanese yen was little changed at 129.21 per dollar
• The offshore yuan fell 0.3% to 6.7455 per dollar

Cryptocurrencies

• Bitcoin was little changed at $18,813.12
• Ether fell 1.2% to $1,408.94

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.47%
• Japan’s 10-year yield rose half a basis point to 0.505%
• Australia’s 10-year yield was little changed at 3.59%

Commodities

• West Texas Intermediate crude fell 0.1% to $78.28 a barrel
• Spot gold fell 0.2% to $1 892.85 an ounce