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Stocks, dollar see muted trading before holidays: Markets wrap

Finance

Stocks traded within narrow ranges while the dollar hovered near its weakest level in almost three months ahead of national holidays.

A gauge for Asian equity benchmarks was mostly unchanged as artificial intelligence stocks slipped following a tepid reaction from investors on Nvidia Corp’s earnings. Futures for European and US stocks were little changed as trading became more muted in the leadup to a holiday in Japan and US Thanksgiving on Thursday.

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“Equity markets have had several macro tailwinds driving them recently, with the prospect of peak interest rates and cuts next year allowing for the multiple expansion that’s characterised the November rally,” Kyle Rodda, a market analyst at Capital.com, wrote in a note. “Nvidia’s results may sober sentiment at the margins as the reality of downward revisions to earnings growth percolates the market.”

Mainland Chinese shares edged lower, with tech and industrial companies among the laggards. Chinese stocks will remain around current levels for some time, according to Hao Hong, chief economist at Grow Investment Group.

“There are so many unresolved issues that are overhanging the Chinese market,” Hong said on Bloomberg Television. “The property bubble probably takes some years to resolve. So as a result, you will see lots of headline risk, but then at the same time you see lots of policy supports.”

The offshore yuan extended its winning streak into a fifth day after China’s central bank set the currency fixing at the strongest level since June. The yuan had jumped beyond the daily reference rate for the first time since July in the previous session.

Treasuries were little-changed in Asian hours after climbing Tuesday, led by the shorter end. The greenback traded in narrow ranges against its Group-of-10 peers.

Cryptocurrencies fell as Binance Holdings and its CEO Changpeng “CZ” Zhao pleaded guilty to antimoney-laundering and US sanctions violations under a sweeping settlement with the US. The deal allows Binance to continue operating, though Zhao stepped down as CEO and will be replaced by Richard Teng. Bitcoin fell as much as 3.2% to $35 663, and Ether declined as much as 2.8% to $1 930.75 before paring the loss.

Proceeding carefully

The Fed’s minutes released Tuesday show policymakers united around a strategy to “proceed carefully” on future interest-rate moves and base any further tightening on progress toward their inflation goal. Swap contracts linked to Fed meetings currently price in around 25% probability of a first Fed rate cut in March.

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“The fact that markets are considering the potential for rates to be lowered in Q1 at all does indicate that it’s going to be pretty hard slating for the US dollar at this stage,” Sean Callow, senior currency strategist at Westpac Banking Corp, said on Bloomberg Television. As the Fed’s December meeting approaches, “markets would be looking for a change of language that really dials down the thread of further hikes,” he added.

Meanwhile, among areas of focus in Asia is China’s latest probe into company executives after the arrest of game-streaming company DouYu International Holdings founder Chen Shaojie on unspecified charges. A series of unexplained executive detentions have created jitters across the country’s private sector.

Markets took news of a limited pause in fighting between Israel and Hamas in stride. Israel’s deal with Hamas will free about 50 hostages in return for a four-day pause in fighting in the Gaza Strip and some Palestinians will be released from Israeli prisons. Oil steadied, with signs of another stockpile build in the US coming ahead of an OPEC+ meeting on supply over the weekend.

Key events this week:

  • Eurozone consumer confidence, Wednesday
  • US initial jobless claims, University of Michigan consumer sentiment, durable goods, Wednesday
  • Bank of Canada Governor Tiff Macklem speaks, Wednesday
  • Eurozone S&P Global Manufacturing & Services PMI, Thursday
  • US markets closed for Thanksgiving holiday while Japan is off for Labor Thanksgiving — Thursday
  • ECB publishes account of October policy meeting, Thursday
  • Black Friday, traditional kickoff for the US holiday shopping season
  • ECB’s Christine Lagarde speaks, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were little changed as of 2:18 p.m. Tokyo time. The S&P 500 fell 0.2%
  • Nasdaq 100 futures fell 0.1%. The Nasdaq 100 fell 0.6%
  • Japan’s Topix rose 0.5%
  • Australia’s S&P/ASX 200 was little changed
  • Hong Kong’s Hang Seng was little changed
  • The Shanghai Composite fell 0.2%
  • Euro Stoxx 50 futures were little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0909
  • The Japanese yen fell 0.1% to 148.54 per dollar
  • The offshore yuan was little changed at 7.1404 per dollar
  • The Australian dollar fell 0.1% to $0.6547
  • The British pound was little changed at $1.2529

Cryptocurrencies

  • Bitcoin fell 1.1% to $36 449.37
  • Ether rose 0.1% to $1 988.55

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.41%
  • Japan’s 10-year yield advanced three basis points to 0.725%
  • Australia’s 10-year yield was little changed at 4.44%

Commodities

  • West Texas Intermediate crude was little changed
  • Spot gold was little changed

© 2023 Bloomberg

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