(Bloomberg) — Asian stocks rose, helped by strong gains in shares of artificial intelligence chipmaker Taiwan Semiconductor Manufacturing Co. Treasuries stabilized after heavy selling on Thursday, as fresh signs of strength in the economy US led traders to reduce expectations of rate cuts.
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Stocks in Japan rose, helped by a weaker yen. China’s fluctuated while Australia’s fell. TSMC jumped as much as 6.3% at the open, following a sharp rally in its U.S.-listed shares on Thursday driven by strong earnings and an upward revision to its 2024 revenue target.
The chipmaker’s gains helped lift the gauge for Asian stocks and put the benchmark index on track for its first daily advance since last week. US futures were steady after the S&P 500 retreated from an intraday record on Thursday to end the session little changed.
In Asia, investors will be firmly focused on China, with third-quarter gross domestic product data expected to reveal the slowest pace of growth in six quarters. The pace of decline in home prices slowed last month, suggesting Beijing’s support measures are having an effect. Industrial production and retail sales data will also be released on Friday, providing greater clarity to investors grappling with the economic support measures unveiled in previous weeks that have rattled Chinese stocks.
Swap traders further reduced their bets on Federal Reserve rate cuts in the year’s remaining two meetings. Treasuries were steady after a jump in yields on Thursday boosted an index of dollar strength for the fourth straight session to a level not seen since early August. Australian and New Zealand yields rose in early trading on Friday, tracking the moves.
The change in forecasts reflected strong U.S. retail sales in September that beat expectations, illustrating resilient consumer spending that continues to drive the economy. The data followed a spectacular jobs report and a higher-than-estimated consumer inflation figure released earlier this month that only reinforced the view that the United States is nowhere near a recession.
“There is a narrow path to a Fed pause in November, but it would likely require all notable economic reports between now and then to indicate a stronger U.S. economy than assumed,” said Matthew Weller of Forex.com and City. Index. “However, regardless of what the Federal Reserve does in November, the projected path for interest rates going into 2025 and beyond is higher than it has been in weeks.”
Elsewhere in the region, headline inflation in Japan rose 2.5% as expected. The yen strengthened moderately after breaking above the psychological level of 150 per dollar on Thursday, once again highlighting the risk of official intervention.
American economy
A series of better-than-estimated data sent the US version of Citigroup’s Economic Surprise Index to the highest level since April. The indicator measures the difference between actual publications and analysts’ expectations.
Retail sales data released Thursday “highlights undeniable strength across the economy,” said Ellen Zentner of Morgan Stanley Wealth Management. “Strong data will encourage Fed participants to reject cuts again in November, but Chairman Jerome Powell is unlikely to be persuaded to press ahead with consistent quarter-point moves.”
“Retail sales were well above expectations and continue to challenge the weak economy thesis,” said Quincy Krosby of LPL Financial. “The implications for monetary policy center on whether the Fed is concerned that the economy’s renewed strength will drive a pick-up in inflation, although expectations persist for a 25 basis point cut at the next meeting.”
In commodities, gold rose to a new record amid ongoing tensions in the Middle East, while West Texas Intermediate, the price of US crude oil, rose slightly to trade at almost $71 per dollar.
This week’s key events:
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China GDP, Friday
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US Housing Starts, Friday
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Federal Reserve’s Christopher Waller and Neel Kashkari speak Friday
Some of the main movements in the markets:
Stocks
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S&P 500 futures were little changed at 9:19 a.m. Tokyo time.
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Hang Seng futures fell 0.3%
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The Japanese Topix rose 0.6%
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Australia’s S&P/ASX 200 fell 0.7%
Coins
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Bloomberg Dollar Spot Index Little Changed
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The euro was little changed at $1.0830
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The Japanese yen rose 0.1% to 150.04 per dollar
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The offshore yuan was little changed at 7.1348 per dollar.
Cryptocurrencies
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Bitcoin rose 0.5% to $67,290.99
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Ether rose 0.2% to $2,601.45.
Captivity
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The yield on the 10-year Treasury bond barely changed, standing at 4.09%.
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The 10-year Japanese bond yield rose one basis point to 0.970%
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The Australian 10-year bond yield rose six basis points to 4.30%
Raw materials
This story was produced with the help of Bloomberg Automation.
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