Markets across Asia displayed a mixed performance today, with key indexes reflecting divergent economic signals from around the globe. The Hang Seng Index in Hong Kong made a significant leap to 17,778.07, while the Shanghai Composite also climbed, reaching 3,068.32. In contrast, Japan's Nikkei 225 fell to 33,388.03. Details for the FTSE Straits Times Index were not specified.
Investors are currently weighing the probability of monetary policy easing by the European Central Bank (ECB) by April 2024, with markets forecasting over a 70% chance despite current pricing in of 100 basis points cuts. Despite these expectations, ECB officials continue to support a prolonged tight policy stance.
In Sweden, the Riksbank is considering another rate hike as the country grapples with high inflation and a weakening krona. Meanwhile, Japan's Nikkei has surged to levels not seen since the 1990s, bolstered by strong earnings reports and anticipation of positive interest rate shifts. Japanese automakers have particularly benefited from a depreciating yen, which has improved their export prospects.
Looking ahead to Tuesday, November 21, 2023 (UTC), U.S. Black Friday sales will be scrutinized for clues on consumer confidence during typically lower trading volumes around Thanksgiving. Additionally, Nvidia (NASDAQ:NVDA)'s upcoming earnings report is expected to provide insights into demand for AI products.
The Federal Reserve's meeting minutes are set to offer further clarity on their decision to pause rate hikes. Market futures suggest that no further Fed rate increases are anticipated this year or next, with potential easing as early as March on the table following October inflation reports that prompted bond rallies and a drop in Treasury yields from recent peaks. This has led to a weakened dollar against a strengthening euro and yen.
Speculators holding short positions in the yen since April could face risks if the Bank of Japan opts for tightening amid concerns over wages and core inflation. In Europe, upcoming manufacturing survey results could influence additional ECB cut bets if they reveal continued decline in the sector.
In commodities, oil prices have rebounded on rumors of an OPEC+ production cut extension, while gold prices edged higher following a weekly increase. Futures for S&P and Nasdaq saw marginal declines even as mega-cap tech stocks outperformed according to Goldman Sachs analysis, despite concerns over their high valuations. EUROSTOXX and FTSE futures experienced slight gains as investors anticipate potential policy shifts indicated by forthcoming economic data.
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