Japan Shines Amid Stock Weakness, Bitcoin Rebounds: Markets Wrap

(Bloomberg) — Japanese stocks climbed to fresh three-decade highs, bucking declines across the rest of the equity world, as broader market sentiment remained muted ahead of a key US inflation report.

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The Topix index closed at its highest since March 1990, supported by a weaker yen and falling bond yields. The Nikkei 225 index jumped 2% after reaching that milestone on Tuesday.

Their feats contrasted a decline in a gauge of Asian equities, with losses seen across China, Hong Kong and Australia. Contracts for European stocks fell and US equity futures also drifted lower.

“Given the quiet economic calendar ahead, sentiment may remain in reserved state, with all eyes on the US inflation data release tomorrow to provide cues for market direction,” said Jun Rong Yeap, a strategist at IG Asia.

Bitcoin rose over 1% to trade at around $46,010 after a bout of volatility that was spurred by speculation the US Securities and Exchange Commission had approved spot-Bitcoin exchange traded funds. The SEC said in a statement that it hadn’t yet given the nod for the ETFs, and said a conflicting post minutes earlier on the regulator’s official X account was untrue.

Treasury 10-year yields advanced and the dollar was steady in Asia trading. The yen extended its weakness against the dollar as a sharp slowdown in Japanese worker wage growth was seen limiting the Bank of Japan’s ability to exit its ultra-loose policy stance.

“With the market’s expectation of an early Federal Reserve rate cut receding after the start of the new year, Japanese stocks remained firm on the back of expectations that the yen’s depreciation against the dollar will support corporate earnings,” JPMorgan chief Japan equity strategist Rie Nishihara wrote in a note.

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Investor are looking to the US inflation report for guidance on the timing of the Fed’s rate cut. The cooling in headline inflation is set to reverse in the December data, according to Bloomberg Economics.

China’s inflation, trade and credit reports are also due in the following days, and will offer a health check on the world’s no. 2 economy. Geopolitics remained in focus. China’s US envoy said the country had no room to compromise with those advocating for Taiwan independence.

Elsewhere, oil rose on signs that US crude stockpiles are continuing to drop, and as more attacks on vessels in the Red Sea raised the risk that Middle East supply could be disrupted.

In the corporate world, Taiwan Semiconductor Manufacturing Co.’s fourth-quarter revenue beat estimates as demand from artificial intelligence players helped offset sagging smartphone and laptop chip sales.

Key events this week:

• US wholesale inventories, Wednesday

• The World Economic Forum’s global risks report is released, Wednesday

• New York Fed President John Williams speaks, Wednesday

• US CPI, initial jobless claims, Thursday

• China CPI, PPI, trade, Friday

• UK industrial production, Friday

• US PPI, Friday

• Some of the biggest US banks report fourth-quarter results, Friday

• Minneapolis Fed President Neel Kashkari speaks, Friday

• ECB chief economist Philip Lane speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 6:35 a.m. London time

• S&P/ASX 200 futures were little changed

• Hong Kong’s Hang Seng fell 0.9%

• The Shanghai Composite fell 0.5%

• Euro Stoxx 50 futures fell 0.3%

• Nasdaq 100 futures were little changed

• Australia’s S&P/ASX 200 fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0929

• The Japanese yen fell 0.3% to 144.87 per dollar

• The offshore yuan was little changed at 7.1851 per dollar

• The Australian dollar rose 0.2% to $0.6698

• The British pound fell 0.1% to $1.2695

Cryptocurrencies

• Bitcoin rose 1.2% to $45,967.36

• Ether rose 2.6% to $2,377.45

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.02%

• Japan’s 10-year yield was unchanged at 0.585%

• Australia’s 10-year yield advanced one basis point to 4.12%

Commodities

• West Texas Intermediate crude rose 0.5% to $72.58 a barrel

• Spot gold fell 0.2% to $2,025.94 an ounce

This story was produced with the assistance of Bloomberg Automation.

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