(Bloomberg) — Asian stocks rose on gains on Wall Street as focus shifted to key U.S. consumer price data to be released later Friday.
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Benchmarks in Japan, South Korea and mainland China all rose modestly as U.S. stocks finished the quarter strong. All eyes are on the Fed's recommended consumer price inflation statistics, which will be released in the coming days, as new clues about the Fed's policy outlook.
Several markets in Asia, including Australia, Hong Kong and Singapore, will be closed on Friday for public holidays.
The region's gains came as traders pushed the S&P 500 index to its 22nd record of the year on data showing the U.S. economy remains healthy. The $4 trillion rise in value of U.S. stocks in just three months has astounded prognosticators, while many strategists are busy updating their 2024 targets.
“Domestic events are driving gains in China, Japan and South Korea, and overnight gains in the U.S. market are supporting investor sentiment,” said Seo Sang-young, market strategist at Mirae Asset Securities. Seo added that quarter-end portfolio rebalancing also appears to be having an impact.
Traders are wary of potential swings in Japan's currency after government officials this week stepped up warnings to stem the currency's decline. The yen has since strengthened slightly against the dollar, but remains near levels not seen in decades.
Japan's Finance Minister Shunichi Suzuki said on Friday that some of the recent moves in the yen's weakness were speculative and did not reflect fundamentals, adding that there was no special line of defense regarding the exchange rate level.
Taishi Fujita, an associate in the Americas Global Markets Department at Bank of Mitsubishi UFJ, says there is a growing sense of wariness about intervention. He says, “Even if you build a position to sell the yen when the yen is appreciating, there is a high possibility that you will drop your position when the price approaches 152 yen.'' He pointed out that there is a possibility that the exchange rate will continue to fluctuate in the range of 151 yen to the dollar.
Consumer price growth in Tokyo slowed, but remained well above the central bank's inflation target, according to the latest data. Authorities may remain on track to consider further hikes after raising interest rates for the first time since 2007 earlier this month.
On the corporate front in China, one of China's largest real estate companies postponed its earnings report, and another posted a historic decline in profits. Country Garden Holdings announced late Thursday that it would miss the deadline for its annual financial report, saying more information was needed. The developer, China Vanke Co., Ltd., said its net profit fell by 46% last year.
no rush
Swap traders on Thursday slightly lowered their expectations that the Fed would cut interest rates as early as June after Fed Governor Christopher Waller said Wednesday there was no need to rush to cut rates. Two-year Treasury yields rose 5 basis points to 4.62% in pre-holiday trading, while the dollar extended its quarterly gains. Trading in Asian cash government bonds has been suspended due to the holiday.
The U.S. government's two main indicators of activity, gross domestic product and consumer spending, showed strong growth late last year. Consumer sentiment rose significantly toward the end of March, due in part to the steady rise in the stock market.
In addition to the release of the PCE price index, the Fed's preferred inflation measure, traders will also closely monitor Fed Chairman Jerome Powell's speech later on Friday.
Elsewhere, gold hit new highs, extending a multi-week rally spurred by bets on the Fed to cut interest rates and deepening geopolitical tensions. Oil rose 16% in the quarter on the latest signs that export curbs by the Organization of the Petroleum Exporting Countries (OPEC) and its allies are constraining global supplies.
Bitcoin fell on Friday after rising as high as $71,555 in the previous session. Meanwhile, FTX co-founder Sam Bankman Fried was sentenced to 25 years in prison for stealing billions of dollars from his customers.
This week's main events:
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Good Friday. Exchanges in the United States and many other countries were closed due to public holidays.US federal government is open
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US Personal Income and Expenditures, PCE Deflator, Friday
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San Francisco Fed President Mary Daley speaks on Friday
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Federal Reserve Chairman Jerome Powell speaks on Friday
The main movements in the market are:
stock
currency
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Bloomberg Dollar Spot Index rose 0.1%
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The euro was almost unchanged at $1.0779.
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The Japanese yen was almost unchanged at 151.35 to the dollar.
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The offshore yuan was almost unchanged at 7.2577 yuan to the dollar.
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The Australian dollar was unchanged at US$0.6516.
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The British pound was almost unchanged at $1.2617.
cryptocurrency
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Bitcoin is little changed at $70,693.21
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Ether remains almost unchanged at $3,560.88
merchandise
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West Texas Intermediate crude rose 2.2% to $83.17 per barrel.
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Spot gold rose 1.6% to $2,229.87 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Youkyung Lee and Daisuke Sakai.
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