Stocks in Asia are set for losses as US equities were mixed and bonds climbed after data underscored a gradual deceleration in the US economy, reinforcing speculation the Federal Reserve will end its hiking campaign. Oil held declines after plummeting Thursday.
Australian shares edged lower while equity futures in Hong Kong slumped. The Golden Dragon Index — a gauge of Chinese shares listed in the US — fell 3.1% Thursday, weighed by a 9% drop in Alibaba Group Holding Ltd. after it called off a spinoff of its giant cloud business. The S&P 500 Index edged higher while the Dow Jones Industrial Index slipped. Contracts on US benchmarks were mostly unchanged in Asian trading.
In Treasuries, yields declined as investors kept a close eye on another batch of economic data on Thursday, with continuing applications for US unemployment benefits rising to the highest in almost two years. Factory production fell by more than expected and homebuilder sentiment hit the lowest in 2023. Australian and New Zealand bonds tracked the Treasury moves.
“The lags in monetary policy are catching up with the economy now — from input costs to industrial production to labor,” said Jamie Cox at Harris Financial Group. “Now, the fight shifts from inflation to preserving economic growth and averting recession. Rate cuts are closer than people think.”
Fed Governor Lisa Cook noted she is attuned to the risk of an unnecessarily sharp economic slump, pointing to strain in some sectors from tighter financial conditions. Fed Bank of Cleveland President Loretta Mester told CNBC she hasn’t decided whether another hike is still needed, adding officials have time to see how the economy is evolving.
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While it’s still too early for the Fed to declare victory over inflation — and rate cuts are still far off — figures like the recent ones will tamp down lingering concerns about an additional hike, according to Chris Larkin at E*Trade from Morgan Stanley.
“The question now is whether this type of ‘Fed-friendly data’ will continue to provide bullish momentum for the stock market,” he noted.
Meanwhile, oil held its slide into a bear market and traded around $73 a barrel. Crude slumped on Thursday as trend-following trades accelerated losses that were kicked off by swelling inventories and the failure of key technical support levels.
Back in the US, shares wavered after a rally from “oversold” levels that was driven by bets the central bank is done with rate hikes — and turbocharged by short covering. The S&P 500 is still on pace for its best month in over a year. The recent rally was a result of investors realizing the Fed is likely finished with its rate-hiking campaign, according to James Demmert, chief investment officer at Main Street Research.
“Further short covering, along with institutional and retail investors being underweight stocks, will likely continue to drive the market higher into year-end,” he said.
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Meantime, money-market fund assets rose to an all-time high for the second-straight week as interest rates north of 5% and volatility in fixed-income markets drove investors to havens.
Gold traded steady after climbing the most in a month in the previous session.
Corporate Highlights:
- Apple Inc. has fallen further behind in its multibillion-dollar effort to make a modem chip for the iPhone, stymied by the complexity of replacing an intricate Qualcomm Inc. component.
- Amazon.com Inc. customers will be able to buy Hyundai Motor Co. vehicles on the e-commerce giant’s website starting next year.
- Gap Inc. reported third-quarter profit that exceeded forecasts and a smaller-than-expected drop in comparable sales.
- Walgreens Boots Alliance Inc. will close most of its stores and pharmacies on Thanksgiving Day, giving thousands of workers an unexpected day off amid walkouts and layoffs.
- Walt Disney Co., battling activist investors and struggling to adapt to changes in consumer viewing habits, plans to address employees in a companywide town hall after Thanksgiving.
- Intel Corp. was upgraded to buy at Mizuho Securities, which said the chipmaker was lining up significant new server products in the next six months.
- Bath & Body Works Inc. anticipates a continuation of softer topline trends in the fourth quarter.
- General Motors Co. employees voted to ratify the labor agreement reached with the United Auto Workers, ending a costly and drawn-out process that included a six-week strike.
- Alibaba Group Holding Ltd. has called off a spinoff of its giant cloud business after the US tightened curbs on advanced chips for China.
- SpaceX is delaying the long-awaited second launch of its massive Starship rocket by one day to Saturday, Chief Executive Officer Elon Musk said.
Key events this week:
- US housing starts, Friday
- US Congress faces a midnight deadline to pass a federal spending measure, Friday
- ECB President Christine Lagarde speaks, Friday
- Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly speak, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:26 a.m. Tokyo time. The S&P 500 rose 0.1%
- Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 0.1%
- Hang Seng futures fell 1.5%
- Australia’s S&P/ASX 200 fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0854
- The Japanese yen was little changed at 150.67 per dollar
- The offshore yuan was little changed at 7.2461 per dollar
- The Australian dollar was unchanged at $0.6470
Cryptocurrencies
- Bitcoin rose 0.4% to $36,118.75
- Ether was little changed at $1,955.78
Bonds
- Australia’s 10-year yield declined eight basis points to 4.47%
Commodities
- West Texas Intermediate crude rose 0.3% to $73.09 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
