Stocks Rise, Currencies Mix in Cautionary Trading: Markets Wrap

(Bloomberg). Stocks saw small gains Monday, while currencies mixed in Asia were due to cautious trading and lower liquidity. Many markets are closed for the holidays.

Bloomberg Most Read

Benchmark equity indexes in South Korea, Japan, China and China rose less than 1% while India’s gained slightly more. Other markets, including Australia, Singapore, and Hong Kong were also closed.

Appetite for risk taking was limited, with the positive impact from recent US inflation data partly offset by concern over China’s ability to cope after abandoning its Covid Zero policy.

Amid a new wave of infections, China’s National Health Commission said it would stop publishing daily case numbers for the coronavirus, complicating the task for investors trying to assess the economic impact.

Meanwhile, data on Friday showed the Federal Reserve’s closely watched measure of inflation cooling and consumer spending stagnating. Consumers’ year-ahead inflation expectations also dropped this month to the lowest since June 2021, a survey by the University of Michigan showed.

While US equities closed higher on Friday, the S&P 500 and the tech-heavy Nasdaq 100 still suffered weekly losses.

If you look at all of the years for global equities combined, 2022 is the worst year in more than a decade.

“The Fed has been telling us they are going to tighten financial conditions until a recession or something ‘breaks’,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “This is not a great place to own speculative assets, especially the long-duration variety telling me in times like this, cash itself is the best at the money put.”

The euro and the offshore yuan edged up, while the Australian dollars erased previous losses. The majority of Group-of-10 currencies traded in narrow ranges against greenback.

The yen strengthened versus the dollar, even after Bank of Japan Governor Haruhiko Kuroda stressed that the BOJ’s latest adjustments to yield control were not the beginning of an exit of monetary easing.

Traders remain skeptical about Kuroda’s intentions, and some are betting that the central banking will raise interest rates next season. Yields on Japan’s 10-year government bonds jumped seven-and-a-half basis points to 0.445%, compared with the BOJ’s new ceiling of 0.5%.

Treasuries closed without cash trading Monday, ending a holiday-shortened session that ended lower on Friday. Ending Friday at 3.75%, the benchmark 10-year yield rose the most since April.

The crypto world continues to reel after the collapse of FTX. Bitcoin was little changed at $17,000 elsewhere in markets on Monday.

All commodities rose Friday, including oil, gold, and copper. Oil saw a significant weekly gain after Russia announced that it would reduce crude production to comply with the Group of Seven’s price cap on exports. This highlights the risks for global supplies in the New Year.

Here are the key events for this week

• China industrial profits, Tuesday

• US wholesale inventories, Tuesday

• BOJ Summary of Opinions of the Dec. 19-20 Meeting, Wednesday

• Thursday, US first jobless claims

• Thursday’s economic bulletin is published by the ECB

These are the top market moves:

Stocks

• Japan’s Topix rose 0.2% as of 3:50 p.m. Tokyo time

• South Korea’s Kospi rose 0.2%

• The Shanghai Composite rose 0.6%

• India’s Nifty 50 rose 1.1%

• The S&P 500 closed 0.6% higher on Friday while the Nasdaq 100 rose 0.3%

Currencies

• The euro rose 0.1% and reached $1.0631

• The Japanese yen rose 0.2%, to 132.68 dollars

• The offshore Yuan rose 0.2%, to 6.9865 dollars

• The Australian dollar was steady at $0.6721

Cryptocurrencies

• Bitcoin rose 0.2%, to $16,855.79

• Ether was little affected at $1,218.58

Bonds

Commodities

• West Texas Intermediate crude oil rose 2.7% to $79.56 per barrel on Friday

• Spot gold rose 0.3% on Friday to $1798.20 an troy ounce

Bloomberg Automation assisted in the production of this story.

Bloomberg Businessweek.

©2022 Bloomberg L.P.