While traders anticipated British inflation numbers later in the day for cues on how aggressive central banks must be to fight inflation, Asian markets were generally higher on Wednesday, helped by U.S. corporate profits.
The largest MSCI Asia-Pacific share index outside of Japan (.MIAPJ0000PUS) increased 0.2%, but further advances were restrained by tepid declines in Chinese stocks. Hong Kong’s Hang Sang index (.HSI) dropped 0.1% while mainland China’s bluechips (.CSI3000) shed 0.2%.
Stocks in other regions rose in step with Wall Street. Australia’s resource-heavy shares (.AXJO) rose 0.4%, the Nikkei of Japan (.N225) increased 0.4%, and the Kospi of South Korea (.KS11) recovered 0.5%.
The Nasdaq futures increased by 1.3%, while U.S. S&P 500 futures increased by 0.8%. Shares of Netflix Inc. (NFLX.O) rose 14% in after-hours trading after the company reversed user losses that had hurt its price this year and forecast more growth.
U.S. stocks rose as a consequence of quarterly reports from companies like Goldman Sachs Group Inc (GS.N), the Johnson & Johnson (JNJ.N) group, and Lockheed Martin (LMT.N) that were better than anticipated. Both the S&P 500 (.SPX) and the Dow Jones (.DJI) saw 1% gains.
The near-term downside risks for equities remain substantial, according to Shane Oliver, the chief economist at AMP Capital, even though they have recently been able to find technical support and may rise much higher.
The dollar fall may somewhat continue if this week’s U.S. data are quiet, according to Chris Turner, who is the global head of markets at ING.
The fundamental bullish trend for the dollar, however, should continue as long as central banks, even those other than the Fed, continue to raise interest rates when a recession approaches.
On Wednesday, the U.S. dollar remained steady and traded near its lowest point in two weeks. However, it overnight reached a new 32-year peak of 149.34 yen before settling at 149.16 despite the possibility of involvement from the Japanese government.
After weakening somewhat in the previous session, the pound rose 0.14% to trade at $1.1335 against the dollar.
Later in the day, the United Kingdom, which has been rocked by a historic meltdown in the government bonds market, will release its readings on inflation for September. Last month’s annual inflation rate was probably in the double digits at 10%.
This would probably put greater pressure on the Bank of England to increase interest rates. The BoE said over the course of the night that it would begin selling a portion of its enormous stock of sovereign British government bonds on November 1 but would not sell any longer-duration gilts this year.
According to Ray Attrill, head of FX strategy at National Australia Bank, a crucial data point of comparison will be today’s Sept UK inflation statistics amid quickly varying opinions and market prices on what the Bank of England will choose to do with rates on 2 November.
Tuesday’s unexpectedly high inflation announcement from New Zealand caused markets to substantially increase the rate of projected Reserve Bank of New Zealand tightening.
After falling more than 3% earlier in the session on concerns about rising U.S. supply and the slowing Chinese economy, oil prices started to rise again on Wednesday.
While U.S. West Texas Intermediate (WTI) crude increased by 1.5% to $84.03 per barrel, Brent crude futures increased by 0.9% to $90.87 per barrel.
A senior administration official, U.S. President Joe Biden will lay out a plan on Wednesday to auction off the remainder of the country’s emergency oil reserve by the end of the year and explain a plan to replenish the stockpile should prices fall.
Following a little decline on Tuesday, US Treasury rates were relatively stable on Wednesday.
While the return on two-year notes steadied at 4.4435%, the yield on benchmark 10-year notes barely changed at 4.0148%.
Gold dropped a little bit. The going rate for spot gold was $1651.09 per ounce.