Market news

25 November 2021

Asian Stock Market: Tracks mildly bid US stock futures on a sluggish day

  • Asia-Pacific shares remain mostly steady, grind higher of late.
  • US Yields retreat despite hawkish Fed Minutes, strong inflation data.
  • Japan services PPI jump to 20-year high, China urges local governments to spend more.
  • BOK announces 0.25% rate hike, Kaisa seeks to extend maturity on $400 million bonds.

Asian equities remain lackluster during the early hours of the Thanksgiving Day holiday on Thursday. Even so, mildly bid S&P 500 Futures and downbeat yields favor the buyers amid mixed catalysts.

Japan’s Corporate Services Price Index for October rose past 0.9 prior level but eased below 1.2% forecast to arrive at 1.0, the highest levels since 2001. The same joins chatters over Japan’s extra budget worth $312 billion to propel Japan’s Nikkei 225, up 0.75% by the press time. Even so, MSCI’s index of Asia-Pacific shares outside Japan remains indecisive with 0.06% intraday gains.

China’s push to local government for more spending, to battle the growth slowdown, joins the filling from a struggling Beijing-based firm Kaisa to favor the buyers. “Kaisa said it would exchange its 6.5% offshore bonds due Dec. 7 for new notes due June 6, 2023, at the same interest rate if at least 95% of holders accept,” per Reuters. These catalysts helped stocks in Australia, New Zealand and China to print mild gains amid a lack of major data/events.

Further, South Korea followed New Zealand in a rush to rate hike, as the Bank of Korea increased benchmark rates by 0.25% but couldn’t much fuel the national equity index named KOSPI. Elsewhere, Indonesia’s IDX Composite tracks gains in China and Pacific markets while India fails to cheer upbeat comments from global rating giant Moody’s.

On Thursday, the US stocks benefited from the 10-year bond coupon’s U-turn from a monthly peak to mark the first negative day in three. In doing so the yields ignore the Federal Open Market Committee (FOMC) Minutes that said, “Some participants said faster taper could be warranted.”

Additionally, portraying the inflation pressured, challenging equity bulls, was a 30-year high print of the Fed’s preferred inflation gauge. The US Personal Consumption Expenditures - Price Index that jumped to 5.0% YoY in October, surpassing 4.6% expected figures and 4.4% prior.

However, the recently sluggish US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data seem to have favored the bond buyers. The stated inflation gauge reversed the previous day’s bounce off a three-week low on Wednesday to print a 2.61% level.

Read: Yields ignore hawkish Fed minutes as US inflation expectations contradict PCE data

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