Asian stocks likely to follow Wall Street tech rally: Market recap

(Bloomberg) — Asian stocks were poised for a rapid advance after a rally in the world’s biggest technology stocks lifted U.S. and global stocks to fresh highs ahead of inflation data due later Thursday.

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Stock futures in Japan, Australia and Hong Kong all advanced, echoing Wall Street’s bullish surge Wednesday that sent the S&P 500 and Nasdaq 100 each more than 1% to new highs. The S&P 500 has advanced in each of the past seven sessions, its longest winning streak since November, helping propel a gauge of global stocks to a record high.

The gains reflect a surge in the final minutes of trading, centered on companies like Nvidia Corp. and Apple Inc. The iPhone maker said it aims to ship 10% more new devices after a turbulent 2023.

Treasury bonds were relatively flat after a $39 billion selloff in 10-year notes, with yields down a basis point to 4.28%. Swaps are pricing in two Fed rate cuts in 2024, with a higher chance of the first coming in September.

The dollar strength index fell on Wednesday. The yen was steady on Thursday morning after weakening further against the greenback on Wednesday.

As Wall Street braced for the consumer price index, Jerome Powell told Congress that the Fed doesn’t need inflation to fall below 2% before cutting rates, but added that officials still have work to do. He noted that the labor market has “cooled considerably.” Powell cited “good leads” on balance sheet reduction and said commercial real estate does not threaten financial stability.

“The key takeaway from his testimony is that the Fed’s assessment of the balance of risks is evolving in a way that – if supported and sustained by incoming data – will result in a rate cut in September,” Evercore’s Krishna Guha said.

Bank of England chief economist Huw Pill said the timing of the rate cut was still an “open question”, prompting traders to reduce their bets on an August cut.

Inflation in the United States

“Markets remain remarkably calm despite the flood of data this week, including testimony from Fed Chair Powell, CPI/PPI reports and the start of earnings season,” said Nationwide’s Mark Hackett.

The so-called core CPI, which excludes food and energy costs and is considered a better measure of underlying inflation, is expected to rise 0.2% in June for a second straight month. That would be the smallest consecutive increase since August, a pace more acceptable to Fed officials.

“The June CPI report looks set to be another ‘very good’ report that should bolster the FOMC’s confidence in the path of inflation,” said Anna Wong of Bloomberg Economics. “This should pave the way for a Fed rate cut in September.”

In Asia, economic data are expected to be plentiful, including consumer confidence in Thailand, machinery orders in Japan and monetary policy decisions in Malaysia and South Korea. Money supply and lending figures from China could also be released as early as today.

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