(Bloomberg) -- Asian equities headed for a third weekly gain, helped along by expectations of more stimulus from China, which also buoyed commodities.
Benchmarks in Australia and South Korea rose alongside equity futures for Hong Kong’s Hang Seng Index. Japanese shares were notable outliers, opening softer after a rally over the past week.
Underscoring the broadly positive sentiment in stocks, the S&P 500 rose for a sixth day on Thursday — its longest winning run since November 2021. The Nasdaq 100 hit the highest since March 2022, helped along by exuberance surrounding artificial intelligence that has also raised concerns about an overbought market. Bets that the Federal Reserve will soon end its tightening cycle also boosted risk sentiment.
The wins for the Asia gauge has it on pace for the best run of weekly advances since January, when excitement over China’s reopening lifted stocks across the region. US futures were slightly lower.
Australia’s yield curve reversed its Thursday inversion, the first since 2008, as three-year yields fell more than 10-year yields. New Zealand yields also declined after a rally in Treasuries on Thursday when the 10-year Treasury yield declined seven basis points to 3.72%.
The yen pared some losses after on Thursday touching its weakest level against the dollar since November. The Bank of Japan is expected to maintain its negative rate policy and yield curve control program.
The dollar steadied after slumping Thursday while the euro held a rally after the European Central Bank lifted interest rates by another quarter-point, with President Christine Lagarde describing a further hike in July as “very likely.”
The move came a day after Fed officials paused their series of interest-rate hikes, but projected borrowing costs will go higher than previously expected, owing to what Chair Jerome Powell called surprisingly persistent inflation and labor-market strength.
The Fed is now in a “data-dependent” mode before it delivers what may be just one final increase in US borrowing costs next month, former Vice President Richard Clarida said.
Elsewhere, the Bloomberg Commodity Index had its biggest advance since November on Thursday.
Wall Street’s fervor will face a big test on Friday with the expiration of a massive amount of options contracts tied to stocks and indexes. The event, known as OpEx, typically obliges traders to either roll over existing positions or start new ones. That usually involves portfolio adjustments that lead to a spike in volume and sudden price swings.
Key events this week:
- Bank of Japan rate decision, Friday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 9:34 a.m. in Tokyo. The S&P 500 rose 1.2%
- Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 1.2%
- Hang Seng futures rose 0.7%
- Japan’s Topix fell 0.4%
- Australia’s S&P/ASX 200 rose 0.4%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0946
- The Japanese yen was little changed at 140.20 per dollar
- The offshore yuan fell 0.1% to 7.1273 per dollar
- The Australian dollar was little changed at $0.6882
Cryptocurrencies
- Bitcoin fell 0.4% to $25,455.81
- Ether fell 0.5% to $1,661.15
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.73%
- Japan’s 10-year yield advanced one basis point to 0.430%
- Australia’s 10-year yield declined two basis points to 3.98%
Commodities
- West Texas Intermediate crude fell 0.2% to $70.47 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Rita Nazareth and Matthew Burgess.
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Author: Rob Verdonck and Richard Henderson