Benchmarks rose in mainland China and South Korea, but Japanese stocks dipped as a survey revealed that confidence among the country’s big manufacturers had fallen somewhat for the first time in four quarters. In other news, gold hit a new high, bolstering a rise fueled by global worries and strong Chinese demand.
China’s CSI 300 Index rose as high as 1.8%, the most since February 29, as a comeback in industrial activity fueled optimism that the country’s economic recovery is gaining steam.
“Emerging optimism about China is real,” said Vishnu Varathan, chief economist for Asia outside Japan at Mizuho Bank in Singapore. It might gain pace due to “corresponding optimism elsewhere in Asia that dovetails with an upturn in global manufacturing,” he added.
Global equities have risen more than 18% in the last two quarters, boosted by bets on interest rate decreases and artificial intelligence businesses. Those topics will be at the forefront of investors’ minds as the markets approach the new year.
Treasury rates and a Bloomberg dollar index fell after Federal Reserve Chair Jerome Powell said Friday that the central bank’s preferred measure of inflation was “pretty much in line with our expectations.” Powell also stated that lower interest rates would not be acceptable until authorities were confident that inflation was under control. Investors believe the US central bank will make its first reduction in June.
The core personal consumption expenditures price index, which excludes volatile food and energy expenses, up 0.3% in February after rising the previous month, marking the largest back-to-back advance in a year. The indicator is up 2.8% from a year ago, still over the Fed’s 2% objective.
“You have a Fed that at the moment is highly data dependent,” said Matthew Luzzetti, Deutsche Bank’s senior US economist. “Until we get either confirmation or a different view on what the data are going to be, it’s kind of hard to gauge exactly where we end up from a Fed policy perspective.”
In Asia, the yen remained close to a three-decade low versus the dollar, as Japanese policymakers threatened intervention. The nation’s car stocks fell, led by Toyota Motor Corp., as negative industry confidence indicators dampened optimism and investors booked profits for the new fiscal year.
Auto output fell due to a temporary suspension by Daihatsu Motor Co., dragging down linked industries, according to Bloomberg Economics’ Taro Kimura in a commentary on the Bank of Japan’s Tankan survey. The mood reading for big automakers led decreases, falling by 15 points.