Indian Morning Briefing: Asian Markets Rise Following Wall Street Rally

GLOBAL MARKETS DJIA 33376.48 526.74 1.60% Nasdaq 10709.37 162.26 1.54% S&P 500 3878.44 56.82 1.49% FTSE 100 7497.32 126.70 1.72% Nikkei Stock 26478.89 91.17 0.35% Hang Seng 19643.48 482.99 2.52% Kospi 2345.95 17.00 0.73% SGX Nifty* 18361.50 111.5 0.61% *Dec contract USD/JPY 131.80-81 -0.49% Range 132.47 131.66 EUR/USD 1.0630-33 +0.24% Range 1.0635 1.0605 CBOT Wheat March $7.676 per bushel Spot Gold $1,816.19/oz 0.1% Nymex Crude (NY) $78.45 $2.0605 US STOCKS consumer sentiment boosted US stocks. The S&P 500 rose 1.5%, with each of its 11 sectors in the green. The Dow Jones Industrial Average advanced 1.6%, while the Nasdaq Composite added 1.5%. Early gains accelerated after consumer confidence data jumped sharply in December to its highest level since April. Sentiment around the economy and labor market improved, while inflation expectations for the year ahead dipped to 6.7% – the lowest in more than a year. Housing market data painted a mixed picture. Existing-home sales fell for a 10th straight month in November to extend the longest streak of declines on record. However, home prices-which have weighed on activity-dropped for the fifth straight month after peaking in June. Some analysts said the combination of a more confident consumer and falling prices-as well as price expectations-is likely welcome news for Federal Reserve officials, who are working on controlling inflation without causing a major recession. “The number one question is at what point can we stop worrying about inflation,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “The Fed doesn’t want to be in an environment where inflation is ping-ponging back-and-forth. They want it to be on a clear downward trajectory.” ASIAN STOCKS Japanese stocks were higher, led by gains in auto and energy stocks, following strong US consumer confidence data overnight and recent stock selloffs due to concerns about higher borrowing costs. The Nikkei Stock Average was up 0.5% at 26512.94. South Korea’s Kospi rose 0.5% to 2340.75, tracking Wall Street’s rally overnight. A marginally more festive atmosphere prevails across stock markets, with Christmas now very much within sight for most investors, said Chris Beauchamp, chief market analyst at IG, in an email. USD/KRW was little changed at 1,280.61, according to FactSet. Hong Kong’s Hang Seng Index rose 1.8% to 19509.32 in early trade, tracking gains on Wall Street overnight, supported by Chinese tech and property stocks. The sectors’ upturn came after Chinese securities regulator CSRC signaled support for real estate developers and said it will promote the mechanism for cooperation for US-China audit oversight. Chinese shares opened higher, tracking gains on Wall Street overnight as inflation expectations eased, which could mean a slowdown of Fed rate hikes. Shares from developers to financials all rise. Greenland Holdings increases by 2.6% and Ping An Insurance rises by 1.7%. Xi’an Catering continued its rally, raising 3.9% in early trade. Chip makers and auto-related companies dragged on the market, with contemporary Amperex Technology falling 0.5%. The Shanghai Composite Index increases 0.6% to 3085.80, while the Shenzhen Composite Index is 0.5% higher and the ChiNext Price Index is up by 0.7%. FOREX The dollar strengthened 0.3% against the euro and 0.6% against the yen following yesterday’s huge move higher by the yen following the Bank of Japan’s policy change. The WSJ Dollar Index gained 0.3% and 10-year Treasury yields rose slightly to 3.691%. Goldman Sachs analysts said in a note that they see USD/JPY moving back higher in the coming months under their baseline view markets are overpricing US recession odds and underpricing the Fed cycle. “Indeed, the yen is no longer even an outlier, or the worst performing G9 currency year-to-date, suggesting that there is limited sign of a special ‘YCC discount’ anymore. However, in the near term we expect markets to raise the odds of a more material BoJ shift, which remains a real possibility.” The firm closed its long USD/JPY recommendation and was placing forecasts under review for reassess. METALS Gold edged higher in the early morning Asian session, with lower US Treasury yields increasing the allure of the non-interest-bearing precious metal. However, it looks like gold could struggle to get anywhere close to the $1,850/oz level unless a fresh major catalyst emerges, said Edward Moya, senior market analyst at Oanda, in an email. Spot gold was up 0.1% at $1,816.19/oz. OIL SUMMARY Oil edged higher in the Asian morning session. The EIA reported a 5.9 million barrel drop in US crude-oil inventories in the week ending Dec. 16, while the Conference Board’s consumer confidence survey jumped to an eight-month high in December. “Bullish momentum continues to take oil markets by storm,” as Northern Hemisphere winter-related energy demand reality set in, said Stephen Innes, managing partner of SPI Asset Management, in an email. Front-month WTI crude-oil futures were 0.4% higher at $78.58/bbl; front-month Brent crude oil futures were 0.2% higher at $82.39/bbl. TOP HEADLINES Consumer Confidence Hits 8-Month High as Worries About Inflation and Recession Fade Home Sales Dropped 7.7% in November US Crude-Oil Inventories Drop Much More Than Expected Sam Bankman-Fried’s Extradition Approved by Judge Europe Skirts a Winter Slump, but War Clouds Its Economic Future IRS Urged to Examine Donald Trump’s Loans to His Children Israel’s Netanyahu Says He Can Form a Government Senate Tries to Get Spending Bill Over Finish Line Zelensky Says Ukraine Will Never Surrender, Asks Biden and Congress for More Aid Hundreds of Tyson Employees to Depart Amid Office Consolidation Micron Cuts Jobs, Spending as Sales Sag on Weak Demand BHP Signs Agreement for $6.4 Billion OZ Minerals Takeover Tesla Bears Are Sitting on $15 Billion in Gains This Year (END) Dow Jones Newswires December 21, 2022 22:15 ET (03) :15 GMT) Copyright (c) 2022 Dow Jones & Company, Inc.

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