(Bloomberg) — Asian stocks traded mixed in the last session of the year after US stocks eked out a gain and as investors bargain-hunt in China. (Bloomberg) — Asian stocks traded mixed in the last session of the year after US stocks eked out a gain and as investors bargain-hunt in China. Australian equities fell as a drop in iron ore prices weighed, while shares in Japan edged higher, keeping the benchmark Topix on track for its best yearly gain in a decade.
Korean shares jumped, lifted by the artificial-intelligence euphoria that has the Nasdaq 100 on pace for its best year since 1999. Chinese futures point to an early gain as investors return to its battered market. Asian stocks are on track for their best year since 2020 as investors return to emerging markets amid signs the Federal Reserve will cut rates next year.
Still, they’ve underperformed global peers, weighed by concerns over China’s economic malaise, a resurgence of food inflation as drought inundates rice crops, and as investors start positioning ahead of elections in the new year. “It’s not hard to imagine new things for the markets to be concerned by, such as elections, the sizable bond funding requirements of the US government, and/or any notion that inflation resurges anew,” said Brian Barish, chief investment officer of Cambiar Investors LLC “The short-term risk/reward does not seem so great. But for now, there’s not much news and not a lot of sellers.
” In a rates-obsessed world, the stock market saw a massive reversal this year after suffering its worst annual selloff since 2008. As traders ramped up bets the Fed is done with its hiking campaign — and will start easing policy in 2024 — global bonds were set for their biggest two-month gain on record. US stock futures edged higher in Asia after the underlying S&P 500 traded just a few points away from its all-time high of 4,796.
56 on Thursday, extending its 2023 advance to 25%. Treasuries held Thursday’s drop after a weak $40 billion sale of seven-year notes. The dollar was steady while the yen pulled back from Thursday’s five month high against the greenback as Bank of Japan Governor Kazuo Ueda continued to prepare the ground for the nation’s first rate increase since 2007.
Meantime, investors are starting to pile back into Chinese shares, bargain hunting in battered industrial and renewable energy stocks after the benchmark Shanghai Shenzen CSI 300 Index fell to its lowest since 2019 earlier this month. The Nasdaq Golden Dragon China Index, a gauge of US-listed Chinese shares, rose 2. 2% on Thursday.
Warnings about a market that’s flashing overbought signals have been raising concern about a pullback, with some market observers saying that traders have gone too far, too fast in pricing in a dovish Fed pivot. “The market shows signs of fatigue and undoubtedly needs to consolidate,” said Quincy Krosby, chief global strategist for LPL Financial, on Thursday. “But as long as participation remains broad, the bullish sentiment should carry the indexes as they navigate geopolitical and domestic scenarios, and an overarching positive consensus that 2024 will be a similarly strong year.
” While the recent ebbing of inflation is positive for the Fed, some other figures showing economic resilience could fuel consumer spending — working against the central bank’s aim to slow the pace of growth. That poses risks for the bond market heading into the new year. Falling yields have also driven the dollar lower in 2023, with the greenback on pace for its worst year since the onset of the pandemic.
Much of the decline materialized in the fourth quarter on growing wagers that the Fed will sharply loosen policy next year. “The bond market is priced for a perfect scenario of the Fed making a second pivot to faster and deeper cuts,” Ben Emons, head of fixed income at NewEdge Wealth LLC, wrote in a note Thursday. “Yields have scope for a tactical move to 4%-4.
25% as the new year allows for gains to be taken off the table and bonds look ripe. Given continued durability of the economy, there’s a lot foam on the FOMO. ” Read More: Wall Street’s Best and Brightest Flopped Once Again in 2023 Elsewhere, oil edged higher, paring Thursday’s 3.
2% loss from rising inventories at the key US storage hub in Cushing, Oklahoma, which partly offset a drop in national stockpiles to paint a mixed picture for demand. WATCH: Andrew Slimmon at Morgan Stanley Investment Management talks about markets. Source: Bloomberg Some of the main moves in markets: Stocks S&P 500 futures were little changed as of 9:09 a.
m. Tokyo time Japan’s Topix rose 0. 4% Australia’s S&P/ASX 200 fell 0.
3% Hang Seng futures fell 0. 4% Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1. 1068 The Japanese yen was little changed at 141.
50 per dollar The offshore yuan was little changed at 7. 1200 per dollar The Australian dollar was unchanged at $0. 6830 Bonds The yield on 10-year Treasuries was little changed at 3.
84% Australia’s 10-year yield advanced seven basis points to 3. 96% Cryptocurrencies Bitcoin rose 0. 4% to $42,648.
51 Ether was little changed at $2,348. 22 Commodities West Texas Intermediate crude rose 0. 5% to $72.
11 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation. More stories like this are available on bloomberg. com ©2023 Bloomberg L.
P. .
From: bloombergquint
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