Asian stocks rise on China policy; Earning Dollars: Market Transformation

(Bloomberg) — Asian shares looked set to open higher on Monday, supported by the biggest weekly gain in U.S. stocks since June and China’s policy changes on Covid and assets.

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The dollar rose after Federal Reserve Chairman Christopher Waller said “we still have a way to go” before ending interest rate hikes.

Shares rose in Australia and futures pointed higher in Hong Kong. Contracts for Japan indicated a modest retreat after a 3% rise in the Nikkei 225 on Friday. US futures were down.

A gauge of US Chinese stocks rose more than 6% on Friday after quarantine rules were eased, boosting bets that Beijing is moving away from its strict Covid Zero policy. Widespread easing of the property sector over the weekend added to signs that President Xi Jinping is turning his attention to rescuing the economy.

The dollar’s gain on Monday came after it fell more than 1% on Friday, falling for a fourth straight week in its worst performance since 2020.

While Waller sees the hike continuing for some time, he said the Fed could begin considering a 50 basis point reduction at its next meeting in December or the day after that.

The exchange rate of the króna had been falling amid signs of a cooling in inflation in the United States and the prospect of the Central Bank leaning into a dove. The University of Michigan’s preliminary November survey on Friday showed US consumers’ short- and long-term inflation expectations rose, while sentiment eased.

That puts a focus on Treasuries when they open on Monday in Asia after cash trading was closed for veterans on Friday.

Cryptocurrencies continued their sell-off on Monday amid FTX’s deepening woes. A sharp dip in the value of FTX’s key crypto assets and unauthorized withdrawals of funds after it filed for bankruptcy suggest that customers have little chance of recovering much of their deposits.

Investors will be closely watching the Group of 20 summit in Indonesia, where US President Joe Biden and Chinese President Xi are expected to meet. Biden’s hand has been strengthened by Democrats defying political predictions and historical trends to retain control of the Senate.

Main events this week:

  • US President Joe Biden is set to meet with Chinese President Xi Jinping on the sidelines of the G-20 on Monday.

  • Governor John Williams chairs the committee, Monday

  • China retail sales, industrial production, unemployment surveyed, Tuesday

  • Former US President Donald Trump is set to make an announcement on Tuesday

  • US Imperial Production, PPI, Tuesday

  • US trade inventories, cross-border investment, retail sales, industrial production, Wednesday

  • Fed John Williams, Lael Brainard and SEC Chairman Gary Gensler speak, Wednesday

  • ECB President Christine Lagarde speaks on Wednesday

  • Eurozone CPI, Thursday

  • US housing starts, first jobless claims, Thursday

  • Fed’s Neel Kashkari, Loretta Mester speaking, Thursday

  • The American Conference Board’s leading index of existing home sales, Friday

Some of the main movements in the markets:

Shares

  • S&P 500 futures were down 0.4% at 8:10 a.m. Tokyo time. S&P 500 rose 0.9%

  • Nasdaq 100 futures fell 0.5%. Nasdaq 100 rose 1.8%

  • Australia’s S&P/ASX 200 rose 0.5%

  • Nikkei 225 futures down 0.5%

  • The Hang Seng index rose 1.1%

Currencies

  • The euro fell by 0.3% to $1.0315

  • The Japanese yen fell 0.6% to $139.65

  • The offshore yuan fell 0.2% to $7.1084

  • The Australian dollar fell 0.4% to $0.6679

Cryptocurrencies

  • Bitcoin was little changed at $16,370.06

  • Ether rose 0.4% to $1,221.45

Bonds

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