(Feb 1): Stocks in Asia were headed for gains after US shares ended January on a high note as signs of cooling inflation encouraged risk appetite ahead of the Federal Reserve’s Wednesday (Feb 1) meeting.
Australian stocks rose and futures contracts for Japanese and Hong Kong equity benchmarks edged higher. Contracts for the S&P 500 fell after the index climbed 1.5% on Tuesday. Nasdaq 100 futures also eased lower after the tech-heavy benchmark rallied 1.6% to cap its best month since July and strongest start to a year since 2001.
Contracts for the Nifty 50 index of Indian blue chips also rose. Investors will be focused on Adani Enterprises Ltd, a member of the benchmark, which successfully raised US$2.5 billion in a closely watched follow-on equity sale Tuesday. The transaction provides some relief for Gautam Adani after fraud allegations by short seller Hindenburg Research.
Australian and New Zealand yields fell after a rally in Treasuries dragged the 10-year benchmark three basis points lower on Tuesday. An index of the dollar dropped slightly and the yen strengthened.
Gains for US stocks were helped along by wage cost data that undershot forecasts. Separate figures showed the US housing market continued to cool. Another report highlighted consumer confidence unexpectedly falling.
The encouraging signs indicate the Fed’s rate hikes over the past year have begun to curtail inflation. The central bank is set to unveil a 25 basis point rate increase on Wednesday and investors will be keenly parsing Fed Chair Jerome Powell’s comments for signs the tightening cycle may soon pause.
“We’re getting closer to the terminal rate,” Sassan Ghahramani, chief executive of SGH Macro Advisors, said in an interview with Bloomberg Television. “Data that has come out does not justify 50 basis point hikes. If anything, I’d say it’s virtually a 100% certainty they do 25.”
Fourth-quarter earnings on Tuesday in the US were mixed. McDonald’s Corp and Caterpillar Inc fell short of profit estimates while General Motors Co and Exxon Mobil Corp outpaced forecasts with the oil major posting its highest ever full-year profit.