Stocks firm as US rate cut outlook tempers Japan bond unease / Photo: © AFP
Stocks firm as US rate cut outlook tempers Japan bond unease
Stocks mostly rose Tuesday following the previous day's stutter, as weak data reinforced optimism for US interest rate cuts and tempered concerns over rising Japanese bond yields.
Expectations that the Federal Reserve will lower borrowing costs have buoyed markets in recent weeks, helping them recover early November's losses driven by tech bubble fears.
Major European indices advanced after a mostly positive session in Asia.
Official data on Tuesday showed Eurozone inflation edged up to 2.2 percent in November, moving slightly away from the European Central Bank's two-percent target.
The ECB will announce its rate decision on December 18.
The data "comes at a time where some had claimed we could yet see another cut from the ECB, although the likeliness is that their easing cycle is over," said Joshua Mahony, chief market analyst at Scope Markets.
Meanwhile, bets on the US central bank easing monetary policy for a third successive meeting have been rising since several Fed decision-makers flagged concerns over labour market weakness.
Those comments have been compounded by figures showing the economy continues to soften while inflation appears to have stabilised for now.
The latest round of data added to that narrative, with a survey of manufacturers by the Institute for Supply Management indicating that activity in the sector contracted for a ninth straight month.
Across Asia, most markets closed higher Tuesday.
Hong Kong, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta were all up, though Shanghai, Mumbai and Bangkok dipped.
Tokyo was flat after erasing early gains, following Monday's losses triggered by Bank of Japan boss Kazuo Ueda hinting at a possible interest rate hike this month.
His remarks lifted the yen and provided a jolt to equities as the yield of Japanese two-year government bonds rose past one percent to their highest since 2008 during the global financial crisis.
The Japanese unit eased slightly Tuesday as an auction of 10-year bonds received healthy interest.
Ueda's hint also weighed on Wall Street after last week's Thanksgiving run-up and dented overall risk sentiment, pulling bitcoin lower.
The comments "could mark a de-anchoring of the carry trade, in which traders borrow yen at low cost to invest in riskier assets", wrote City Index senior market analyst Fiona Cincotta.
"A higher rate in Japan could suck liquidity out of the markets. Tech stocks and crypto are particularly sensitive to even the smallest shifts in liquidity."
South Korean tech titan Samsung Electronics jumped more than two percent in Seoul as it launched its first triple-folding phone, even as its more than $2,400 price tag places it out of reach for the average customer.
Oil prices were stable ahead of talks between US envoy Steve Witkoff and Russian President Vladimir Putin in Moscow on the Trump administration's controversial proposal to end the war in Ukraine.
- Key figures at around 1110 GMT -
London - FTSE 100: UP 0.4 percent at 9,740.40 points
Paris - CAC 40: UP 0.4 percent at 8,128.00
Frankfurt - DAX: UP 0.8 percent at 23,766.87
Tokyo - Nikkei 225: FLAT at 49,303.45 (close)
Hong Kong - Hang Seng Index: UP 0.2 percent at 26,095.05 (close)
Shanghai - Composite: DOWN 0.4 percent at 3,897.71 (close)
New York - Dow: DOWN 0.9 percent at 47,289.33 (close)
Dollar/yen: UP at 156.01 yen from 155.50 yen on Monday
Euro/dollar: DOWN at $1.1607 from $1.1608
Pound/dollar: DOWN at $1.3197 from $1.3211
Euro/pound: UP at 87.98 pence from 87.87 pence
West Texas Intermediate: UP 0.1 percent at $59.36 per barrel
Brent North Sea Crude: FLAT at $63.16 per barrel
(L.Barsayjeva--DTZ)
Featured