Asia Stocks Set for Mixed Open Amid Jump in Dollar: Markets Wrap

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(Bloomberg) — Asian stocks looked set for a mixed open Thursday after the latest Federal Reserve minutes flagged the risk of a faster reduction in stimulus. The dollar jumped and the Treasury yield curve flattened.

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Equity futures for Japan and Australia rose while Hong Kong’s fell. The S&P 500 and tech-heavy Nasdaq 100 edged up on below average trading volumes ahead of the U.S. Thanksgiving holiday. Data showed U.S. consumers kept spending despite skyrocketing inflation, pointing to a year-end growth spurt.

Fed officials at their last meeting were open to removing policy support at a faster pace to keep inflation in check. Reports since then have suggested persisting price pressures amid a robust economic recovery.

Expectations of an earlier Fed interest-rate liftoff saw shorter maturity Treasury yields advance, while longer-maturity rates retreated, flattening the bond curve. A gauge of the dollar reached a 16-month high, while the euro was weaker as Europe faces mobility curbs to fight a Covid surge.

Global stocks have dipped from all-time highs as central banks cut back on monetary accommodation. Assets from equities to commodities and cryptocurrencies have delivered substantial gains this year. Investors are questioning how much further they can go as liquidity tailwinds start to cool.

“We need to be careful here about loading up on risk,” Emily Roland, co-chief investment strategist at John Hancock Investment Management, said on Bloomberg TV. “We want to own some cyclicality to play this continued rebound and this continued unfolding of the recovery here, but we want to just pump the brakes a little bit.”

U.S. reports showed personal spending rose in October from a month earlier by more than expected, while a closely watched inflation measure posted the largest annual increase in three decades. Jobless claims fell to the lowest since 1969.

Fed’s Daly

San Francisco Fed President Mary Daly said it would be hard to argue against a faster reduction in bond purchases if reports on the labor market and consumer prices due out early next month show continued strength.

Elsewhere, oil was steady as traders await the response of OPEC+ to a coordinated release of strategic reserves by consuming nations.

In the Asia Pacific, South Korea is expected to follow New Zealand in hiking interest rates as policy makers try to contain increases in the cost of living.

The Mexican peso led declines in emerging-market currencies following an announcement of a new central bank chief that raised questions about the independence of the country’s monetary authority.

For more market analysis, read our MLIV blog.

Here are some key events this week:

  • Bank of Korea policy decision Thursday

  • U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday

  • Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday

Some of the main moves in markets:

Stocks

  • The S&P 500 rose 0.2%

  • The Nasdaq 100 rose 0.4%

  • Nikkei 225 futures rose 0.2%

  • Australia’s S&P/ASX 200 Index futures rose 0.1%

  • Hang Seng Index futures fell 0.4%

Currencies

  • The Japanese yen was at 115.43 per dollar

  • The offshore yuan traded at 6.3954 per dollar

  • The Bloomberg Dollar Spot Index rose 0.3%

  • The euro was at $1.1201

Bonds

Commodities

  • West Texas Intermediate crude fell 0.1% to $78.39 a barrel

  • Gold was at $1,788.52 an ounce

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