Japan Stocks Hit 34-Year High, Bitcoin Rebounds: Markets Wrap

(Bloomberg) — Japanese stocks powered ahead toward a fresh three-decade high, bucking declines across Asia, while broader market sentiment remained muted as investors await a key US inflation data.

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The broad Topix index rose above a September intraday high to touch a 34-year peak as a weaker yen supported exporter stocks. The Nikkei 225 index jumped over 2% after the benchmark hit its highest since 1990 on Tuesday. Their gains helped nudge a gauge of Asian equities higher even as markets including mainland China and Hong Kong traded lower.

US equity futures were little changed. The S&P 500 closed Tuesday down 0.2%, while the tech-heavy Nasdaq 100 managed an advance by the same magnitude, extending a rebound in tech stocks following heavy selling last week.

“With the market’s expectation of an early Fed 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.

Bitcoin rose over 1% to trade at around $46,167 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 the nod 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 in Asia trading. 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.

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“Given the quiet economic calendar ahead, sentiment may remain in 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.

Investor are looking to the US inflation report for guidance on the timing of the Federal Reserve’s rate cut. The cooling in headline inflation is set to reverse in the December data, according to Bloomberg Economics.

A growing mismatch between aggressive pricing for US interest rate cuts and resilient economic fundamentals reducing the need for such easing risks creating a “reverse Goldilocks” scenario for global markets, according to Max Kettner at HSBC Holdings Plc. He sees the Fed starting its easing cycle in June, later than market pricing indicating May or even March.

Among other data from Asia, Australia’s inflation moderated, boosting the case for interest rates to be kept unchanged. The Australian dollar rose against the greenback.

China’s inflation, trade and credit reports are also due in the following days, and will offer a health check on the world’s no. 2 economy.

Geopolitics remained in focus. 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

• S&P 500 futures were little changed as of 1:38 p.m. Tokyo time

• Nasdaq 100 futures were little changed

• Japan’s Topix rose 1.5%

• Australia’s S&P/ASX 200 fell 0.7%

• Hong Kong’s Hang Seng fell 0.4%

• The Shanghai Composite fell 0.2%

• Euro Stoxx 50 futures fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was unchanged at $1.0931

• The Japanese yen fell 0.2% to 144.82 per dollar

• The offshore yuan was little changed at 7.1834 per dollar

• The Australian dollar rose 0.2% to $0.6703

Cryptocurrencies

• Bitcoin rose 1.4% to $46,053.95

• Ether rose 2.3% to $2,370.55

Bonds

• The yield on 10-year Treasuries was little changed at 4.02%

• Japan’s 10-year yield declined one basis point to 0.575%

• Australia’s 10-year yield was little changed at 4.11%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess and Rob Verdonck.

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