Markets Wrap – BNN Bloomberg

(Bloomberg) — The dollar rose, weighing on Asian stocks as risk appetite stayed subdued given the prospect of less aggressive Federal Reserve interest rate cuts. 

The greenback was up against all Group-of-10 currencies, after the euro hit the lowest since early August amid bets the European Central Bank will keep lowering rates. The yen weakened as much as 0.5% against the dollar. 

A gauge of Asian equities dropped 0.1%, amid declines in Japan and mild gains in South Korea and Australia. Hong Kong stocks opened modestly higher, while those in mainland China fluctuated. US contracts edged lower after the S&P 500 closed little changed.  

The lackluster performance of equities comes as investors have pared back bets on rapid policy easing as the US economy remains robust and concerns rise about wider fiscal deficits after the presidential election. In Asia, the stamina of China’s recent stock rally continues to draw attention, after a top government-linked think tank called on authorities to issue 2 trillion yuan ($281 billion) of special government bonds to help create a market stabilization fund. 

“Asia is mostly on its back foot,” said Vishnu Varathan, Asia head of economics and strategy for Mizuho Bank. “USD is dominating against a backdrop of Fed speak suggesting more gradual cuts, IMF revisions suggesting relative US exceptionalism holding up, and the absence of follow-through bulls in China.”

The US stock market has rallied this year thanks to a resilient economy, strong corporate profits and speculation about artificial-intelligence breakthroughs — sending the S&P 500 up over 20%. Yet risks keep surfacing: from a tight US election to war in the Middle East and uncertainty around the trajectory of Fed easing.

Most Fed officials speaking earlier this week signaled they favor a slower tempo of rate reductions. Policymakers at their meeting last month began lowering rates for the first time since the onset of the pandemic. They cut their benchmark by a half percentage point, to a range of 4.75% to 5%, as concern mounted that the labor market was deteriorating and as inflation cooled close to the Fed’s 2% goal. 

Meanwhile, the International Monetary Fund lowered its global growth forecast for next year and warned of accelerating risks from wars to trade protectionism, even as it credited central banks for taming inflation without sending nations into recession.

Back in Asia, two stock listings were in the spotlight. Tokyo Metro Co.’s shares rose as much as 47% in their debut, after the company raised 348.6 billion yen ($2.3 billion) in the country’s largest initial public offering since mobile carrier SoftBank Corp. listed in 2018. In Hong Kong, China Resources Beverage Holdings Co. gained 14%, showing strong response to one of the city’s biggest initial public offerings this year.

Oil fell as a US industry group signaled a rise in nationwide crude inventories, and the Biden administration renewed efforts to secure a cease-fire in the Middle East. Gold dropped after climbing to a fresh record.

Elsewhere, options traders are increasing bets that Bitcoin will reach $80,000 by the end of November no matter who wins the US election. Back in Japan, the 40-year government bond yield climbed to its highest level in 16 years amid growing speculation that the nation’s central bank will push ahead with interest rate increases in coming months. 

In corporate news, Texas Instruments Inc. gave a downbeat outlook for the current period even after topping estimates. Starbucks Corp. pulled guidance for 2025 after sales plunged for a third consecutive quarter. McDonald’s Corp. slumped as its Quarter Pounders were linked to an E. Coli outbreak in the western part of the US.

Key events this week:

Some of the main moves in markets:

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

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