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Asian Stock Market: Tracks Wall Street’s gains despite sluggish S&P500 Futures amid US debt limit optimism

  • Equities in Asia-Pacific zone grinds higher while tracing Wall Street’s moves, ignoring S&P500 futures.
  • Stocks in Australia, New Zealand benefit from easing hawkish RBA bets and upbeat NZ budget.
  • China’s trade news, hopes of no US default jostle with fears emanating from US retail giants to tame optimism.
  • Risk catalysts are the key amid light calendar for the rest of the day.

Risk appetite remains firmer in Asia, tracking Western moves, as traders seem optimistic about the US debt ceiling extension. Adding strength to the risk-on mood could be the Aussie jobs report and New Zealand budget, as well as China trade news.

Amid these plays, MSCI’s index of Asia-Pacific shares ex-Japan rises 0.70% whereas Japan’s Nikkei 225 prints 1.60% intraday gains at the highest levels since late 2021.

Australia’s headline Employment Change marked a surprise figure of -4.3K in April versus 25K expected and 53K prior whereas the Unemployment Rate jumps to 3.7% from 3.5% prior. With this, the hawkish bias surrounding the Reserve Bank of Australia (RBA) fades and allows the Aussie shares to remain firmer. On the same line, New Zealand (NZ) reports a no-frills budget and propels the NZX50 by nearly 1.20% on a day at the latest.

Furthermore, China’s ambassador to Australia, Xiao Qian, recently hints at resuming imports of Australian timber as talks are underway about a visit by Australian Prime Minister Anthony Albanese to Beijing, per the South China Morning Post (SCMP). With this, stocks in China, Hong Kong and Taiwan are all firmer.

It’s worth noting, however, that Indonesia’s IDX Composite bucks the bullish trend in the Asia-Pacific markets while Indian equities remain mildly bid by the press time.

On a broader front, comments from US President Joe Biden and House Speaker Kevin McCarthy managed to convince the markets that they can unite to avoid the ‘catastrophic’ default, which in turn underpinned the market’s risk-on mood. Even so, doubts about US President Joe Biden’s assurance to have a budget solution by Sunday’s end seem to prod the upbeat sentiment. Also poking the market’s upbeat mood are fears of easing US statistics as Reuters said that US retail sales have remained resilient despite higher prices but consumers have been careful about their spending, hurting companies such as Target and Home Depot, whose merchandise largely consists of discretionary products.

Against this backdrop, S&P500 Futures print mild losses despite the upbeat Wall Street close whereas the US Treasury bond yields remain sidelined at the multi-day top. That said, the US 10-year and two-year Treasury bond yields rose to the highest levels since May 01 and April 24 while portraying a four-day uptrend near 3.57% and 4.16% respectively, easing to 3.56% and 4.14% by the press time.

Also read: Forex Today: Dollar weakens amid risk appetite; eyes turn to Australian jobs data

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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