Asian Stocks Set for Sluggish Start as CPI Looms: Markets Wrap – Yahoo Finance

December 10, 2024

(Bloomberg) — Asian stocks were poised for a lukewarm move as traders awaited key U.S. inflation data for clues on whether the Federal Reserve will cut or keep interest rates unchanged next week.

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Sydney stocks fell slightly and Tokyo benchmark futures fell slightly, but Hong Kong stocks set a solid opening price. The S&P 500 index was little changed on Wednesday after a small move in the U.S., where stocks fell and bond yields rose in the lead-up to the release of the consumer price index.

“Animal Spirits took a breather ahead of the CPI,” said Jose Torres of Interactive Brokers. “U.S. stocks have stalled near all-time highs as investors await this year's final CPI report, which is expected to reflect further annualized gains in the composite index. ”

Wednesday's CPI will give Fed officials a final look at the price environment ahead of their next meeting. Any signs that progress is stalling could significantly undermine the chances of a rate cut. Currently, swaps predict an 80% chance that the Fed will cut interest rates by a quarter of a percentage point this month.

Bank of America strategists say the market is pricing in the smallest implicit reaction to the CPI since 2021, which they argue will be more important this time around.

“The second half of December was the second strongest period of the year, and a softer development could pave the way for a year-end bull market,” said Ohsung Kwon's team. “On the contrary, stronger stock prices could improve volatility, especially after post-election rallies.”

The S&P 500 and Nasdaq 100 both fell 0.3%. The yield on the 10-year US Treasury note rose 3 basis points to 4.23%. The Bloomberg Dollar Spot Index rose 0.1%.

Wednesday's CPI figures show the consumer price index, which excludes food and fuel, is expected to rise by 0.3% for the fourth year in a row. The data will be the last major inflation measure before the Fed's final policy meeting of the year.

China is set to begin its annual economic working conference on Wednesday to set next year's policy, with traders encouraged by the strongest stimulus signal from its top leader in years. President Xi Jinping said on Tuesday that the Chinese government has full confidence in achieving this year's economic growth targets.

China could widen its budget deficit to the largest in 30 years and cut interest rates by its deepest level since 2015, economists said. At least seven Chinese brokerages say their budget deficit targets could reach 4% of gross domestic product next year, the highest level since a major tax reform in 1994. I expect there to be. The Chinese government has historically maintained its budget deficit ratio below 3%.

Meanwhile, Nippon Steel's bid to buy United States Steel appears to be nearing its final stages, with President Joe Biden threatening to formalize the $14.1 billion sale on national security grounds if the deal is returned later this month. It is planned to be stopped. A person familiar with the matter said.

Company highlights:

JPMorgan Chase & Co. said its net interest income will exceed expectations next year, reversing a previous outlook that analysts said was too optimistic.
Boeing Co. resumed assembly of its best-selling aircraft after a debilitating 53-day long strike, announcing November deliveries were the lowest in four years.
Sycamore Partners is in talks to buy struggling drugstore chain Walgreens Boots Alliance Inc., according to people familiar with the matter.
Data analytics software company C3.ai Inc. reported better-than-expected quarterly revenue and raised its full-year sales forecast.
Taiwan Semiconductor Manufacturing Co.'s sales rose 34% in November, reflecting sustained growth driven by demand for AI, despite concerns about a slowdown in data center construction.
Alaska Airlines Group, owner of its eponymous airline and Hawaiian Airlines, has laid out plans for dramatic global expansion while raising profit forecasts.
Eli Lilly & Co. has approved a stock buyback program worth up to $15 billion as the company experiences rapid growth, fueled in part by its blockbuster weight-loss drug Zepbound. The company also raised its quarterly dividend by 15%.
Designer Brands, the parent company of footwear and accessories chain DSW, lowered its full-year adjusted earnings per share forecast.
Database software company MongoDB Inc. reported third-quarter results and announced the resignation of Chief Financial Officer Michael Gordon. Although analysts have pointed to strong results, Mr. Guggenheim said his departure is not positive.