(Bloomberg) — Asian stocks are set for a mixed open after a $2.7 trillion rally in US shares fueled by bets the Federal Reserve will end its hiking cycle fizzled out. The dollar edged higher against most major peers.
Equity futures in Australia and Hong Kong pointed to gains in early Asia trading, while contracts in Japan and mainland China signaled losses. The S&P 500 inched above 4,500 on Friday to notch its third straight week of gains — the longest run since July.
Equities have made a rapid about-face to “overbought” from “oversold” levels — spurring calls they are due for a breather. After an “epic risk rally,” investors should offload those assets as technical and macroeconomic headwinds are building, according to Michael Hartnett, chief investment strategist at Bank of America Corp. “Fade it,” he said.
Investors will be eying the start of US stock futures trading to gauge any fallout from Sam Altman’s shock ouster as chief executive of OpenAI. A group of the company’s executives and investors racing to get him reinstated has reached an impasse over the makeup and role of the board, according to people familiar with the negotiations.
Signs are also pointing to further de-escalation in the Middle East. A deal with Hamas to release hostages taken during the Oct. 7 attack on Israel may be close and would require a multiday pause in the fighting in Gaza, US Deputy National Security Advisor Jon Finer said Sunday.
Last week was the dollar’s worst in four months amid bets the currency has already peaked, with softer-than-expected economic data reinforcing bets the Fed is done with rate hikes. Oil rebounded after briefly entering a bear market, but posted its fourth straight weekly drop on supply pressures.
Gauges of US and global bond returns erased year-to-date losses. Still, Franklin Templeton’s Sonal Desai said last week’s rally has gone too far, too fast.
“Markets are priced for beyond the perfect landing,” she told Bloomberg Television. “There do remain risks to inflation, and there isn’t enough data to support the rate cuts priced for next year.”
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Traders in Asia on Monday will get their chance to digest the latest Fedspeak. Fed Vice Chair for Supervision Michael Barr reiterated officials are likely at or near the end of their tightening campaign. Yet Fed Bank of San Francisco President Mary Daly said policymakers aren’t certain inflation is on a path to their 2% target.
“The near-term risk is that the market has gotten ahead of itself,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “Fed officials and central bankers may lean against what might be seen as premature easing of financial conditions.”
This week, investors will also be keeping a close eye on Nvidia Corp. earnings as well as China loan prime rates and inflation readings in Canada and Japan. Trading is likely to become more muted toward the end of the week with the US Thanksgiving Holiday on Thursday.
Key events this week:
- China 1- and 5-year loan prime rates, Monday
- Thailand GDP, Monday
- Hong Kong CPI, Tuesday
- Canada CPI, Tuesday
- Federal Reserve Nov. policy meeting minutes, Tuesday
- Nvidia earnings, Tuesday
- ECB President Christine Lagarde speaks, Tuesday
- Eurozone consumer confidence, Wednesday
- Singapore GDP, Wednesday
- Bank Indonesia policy decision, Thursday
- Eurozone PMIs, Thursday
- Norway GDP, Thursday
- Thanksgiving holiday in the US, Thursday
- Japan CPI, Friday
- Germany GDP, Friday
- US manufacturing PMI, Friday
- Black Friday sales begin, Friday
Some of the main moves in markets:
- S&P 500 rose 0.1% on Friday
- Nasdaq 100 was little changed
- S&P/ASX 200 futures rose 0.4%
- Hang Seng futures rose 1%
- Nikkei futures fell 0.2%
- CSI 300 futures fell 0.5%
- The Australian dollar was little changed at $0.6514 at 6:21 a.m. in Tokyo
- The euro was little changed at $1.0913
- Bitcoin rose 0.9% to $36,908.78
- Ether rose 1.1% to $1,982.96
- The yield on 10-year Treasuries was little changed at 4.44% on Friday
- West Texas Intermediate crude rose 4.1% to $75.89 a barrel on Friday
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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