Currencies, mixed actions in cautious Asian trading: Markets close

(Bloomberg) – Stocks and currencies were mixed in Asia on Monday on cautious trading and tight liquidity with many markets closed for holidays.

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Key indices for mainland China rose, Japan’s Topix fluctuated and South Korea’s Kospi gauge fell. Other markets, including Hong Kong, Singapore and Australia have been closed.

The appetite for risk-taking has been dampened by concerns about China’s ability to cope after abandoning its Covid Zero policy. This was particularly evident in a decline in the Australian dollar, which was particularly sensitive to the demand outlook in China.

Amid a fresh surge in infections, China’s National Health Commission said it would stop publishing daily numbers of coronavirus cases, complicating the task of investors trying to assess the economic impact.

The yen posted a small gain against the dollar as traders consider the possibility of the Bank of Japan raising interest rates next year after last week’s surprise adjustment to its 10-year yield target.

Data on Friday showed Japan’s key inflation gauge further accelerated to the fastest pace since 1981, which could support more bets for a move from the BOJ.

Meanwhile, stocks on Wall Street ended Friday’s session higher as investors digested data showing US inflation continues to fall and the Federal Reserve’s rate hikes are serving their purpose.

This provided some support to Asian markets, although the S&P 500 and the tech-heavy Nasdaq 100 still suffered their third week of losses.

Looking at the full year for global equities, 2022 was the worst annual performance in more than a decade.

“The Fed has told us it will tighten financial conditions until a recession or something ‘breaks,'” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “This is not a great place to own speculative assets, especially the long-dated variety which tells me in times like this, money itself is best for money put.”

There will be no cash trading on Monday in Treasuries, which closed a holiday-shortened session on Friday. The 10-year benchmark yield rose the most last week since early April, closing at around 3.75% on Friday.

Friday’s data showed the Federal Reserve’s closely watched measure of cooling inflation and stagnating consumer spending. Consumers’ inflation expectations for next year also fell this month to their lowest since June 2021, a University of Michigan survey showed.

Elsewhere in the markets, Bitcoin moved slightly below $17,000 on Monday, as the cryptocurrency world continued to reel from the FTX crash.

In commodities, everything from oil to gold and copper was up on Friday. Oil posted a substantial weekly gain as Russia said it could cut crude output in response to the Group of Seven cap on its exports, highlighting risks to global supplies in the new year.

Key events this week:

  • China Industrial Profits, Tuesday

  • US Wholesale Inventories, Tuesday

  • BOJ summary of views from December 19-20 meeting, Wednesday

  • Initial jobless claims in the US, Thursday

  • The ECB publishes its economic bulletin on Thursday

Some of the major moves in the markets:

Actions

  • Japan’s Topix was up 0.1% as of 10:46 Tokyo time

  • South Korea’s Kospi fell 0.3%

  • The Shanghai Composite is up 0.2%

  • The S&P 500 closed up 0.6% on Friday, while the Nasdaq 100 was up 0.3%.

Currencies

  • The euro was little changed at $1.0615

  • The Japanese yen rose 0.3% to 132.48 to the dollar

  • The offshore yuan was adjusted slightly to 7.0009 to the dollar

  • The Australian dollar fell 0.4% to $0.6694

Cryptocurrencies

  • Bitcoin climbed 0.1% to $16,851.96

  • Ether rose 0.2% to $1,220.8

Bonds

Goods

  • West Texas Intermediate crude climbed 2.7% to $79.56 a barrel on Friday

  • Spot gold rose 0.3% to $1,798.20 an ounce on Friday

This story was produced with assistance from Bloomberg Automation.

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