Asia stocks rise on US rate bets, China reopening

  • US stock futures rise, Nikkei futures gain
  • Expect US CPI report to make case for smaller Fed hikes
  • Earnings season kicks off with major banks on Friday
  • Dollar guards losses, yuan at its highest level since mid-August

SYDNEY, Jan 9 (Reuters) – Asian stocks rose on Monday as hopes of less aggressive rate hikes in the United States and the opening of China’s borders boosted the outlook for the global economy.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 1.5% to a five-month high, with South Korean shares (.KS11) gaining 2.1%.

chinese blue chips (.CSI300) added 0.4%, while Hong Kong shares (.HSI) rose 1.4%. The Chinese yuan also hit its highest level since mid-August.

japan nikkei (.N225) it was closed for a holiday but futures were trading at 26,230, compared with a cash close Friday of 25,973.

S&P 500 futures added 0.2% and Nasdaq futures added 0.3%. EUROSTOXX 50 futures added 0.5%, while FTSE futures firmed 0.4%.

Earnings season kicks off this week with major US banks, and the Street fears there won’t be any year-on-year growth in overall earnings.

“Excluding Energy, the S&P 500 EPS (earnings per share) is expected to fall 5%, driven by 134bps of spread compression,” Goldman Sachs analysts wrote. “Going into reporting season, earnings review sentiment is negative relative to the story.

“We expect further downward revisions to the consensus EPS forecasts for 2023,” they added. “The reopening of China is an upside risk to 2023 EPS, but margin pressures, taxes and the recession present bigger downside risks.”

One sign of the tension came from reports that Goldman would start cutting thousands of jobs across the company starting Wednesday as it braces for a tough economic environment. read more

In Asia, Beijing has now opened borders that had been nearly closed since the start of the COVID-19 pandemic, allowing for a surge in traffic across the country. read more

Bank of America analyst Winnie Wu expects the economy of China, the world’s second-largest economy, to benefit from a cyclical upturn in 2023 and sees a market upside from both multiple expansion and 10-year growth. % of earnings per share.


Sentiment on Wall Street received a boost last week due to a benign combination of strong gains in US payrolls and slower wage growth, combined with a sharp decline in service sector activity. The market reduced bets on rate hikes for the Federal Reserve.

Fed funds futures now imply around a 25% chance of a half-point rise in February, up from 50% a month ago.

That will make investors extremely sensitive to anything Fed Chairman Jerome Powell might say at a central bank conference in Stockholm on Tuesday.

Also of increasing importance is Thursday’s US Consumer Price Index (CPI) data, which is expected to show annual inflation slowing to a 15-month low of 6.5% and a core rate of 5.7%.

“At NatWest we have lower-than-consensus CPI forecasts, and if correct, it will probably solidify the market price 25bps vs. 50bps,” said John Briggs, an analyst at NatWest Markets.

“In context, it should still be seen as a Fed that is likely to still raise a few more times and then keep rates high until inflation is guaranteed to drop – for us that means a 5-5.25% funds rate.”

Mixed data on Friday had already seen US 10-year yields fall 15 basis points to 3.57%, while dragging the US dollar lower across the board.

On Monday morning, the euro was holding firm at $1.0660, after rebounding from a low of $1.0482 on Friday. The dollar fell to 131.82 yen, far from last week’s high of 134.78, while its index was flat at 103.740.

The Brazilian real had yet to trade after hundreds of supporters of far-right former President Jair Bolsonaro were arrested after storming Congress, the presidential palace and the country’s Supreme Court. read more

The fall in the dollar and yields was a boon for gold, lifting it to a seven-month high of around $1,870 an ounce.

Oil prices were more stable, after falling around 8% last week amid concerns about demand.

Brent crude gained 65 cents to $79.22 a barrel, while US crude rose 55 cents to $74.32 a barrel.

Reporting by Wayne Cole; Edited by Bradley Perrett and Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.

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