Sydney, Dec. 22 (BNA): Asian stocks jumped into the black on Thursday after an upbeat reading on US consumers cheered Wall Street investors, while the yen added to the week’s massive gains as Japanese bond yields settled in a new higher range.
In a surprise, US consumer confidence rose to an eight-month high in December as the job market remained strong. Inflation expectations eased to 6.7%, the lowest level since September 2021, thanks to lower gas prices, Reuters reported.
That helped spark a rally on Wall Street with S&P 500 and Nasdaq futures adding another 0.3% on Thursday.
EUROSTOXX 50 futures rose 0.2% and FTSE futures rose 0.3%, although volumes eased due to the usual seasonal lull.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1.5%, while Chinese blue chips rose 0.6%.
Japan’s Nikkei rose 0.5% after the government revised its growth forecast for the next fiscal year in hopes of higher business spending and a big wage hike.
Investors are still grappling with the fallout from the Bank of Japan’s shock decision to let yields on Japanese government bonds soar this week, leading many to assume that a full tightening of policy is only a matter of time.
Ten-year government bond yields rose 23 basis points this week to 0.480%, the highest level since July 2015 and within the BoJ’s new cap of 0.5%.
“The jump in yields and further strengthening of the yen will reduce the value of assets held by Japanese investors,” said analysts at Capital Economics.
“Insurance companies will be affected the most by falling bond prices, while pension funds will have the biggest loss from exchange rate appreciation. However, we suspect that lower investment returns carry systemic risks.”
Capital also now expects the dollar to fall around 125 yen next year. The dollar actually fell to 131.84 yen, after falling 3.6% for the week so far, although it found some support around 130.40.
The Euro lost 3.0% against the Yen for the week, at 140.26. With all the movement in the yen, the euro was more steady against the dollar at $1.0640.
Sterling had less luck after Britain’s public borrowing hit a record high in November and strikes across the country clouded the UK’s economic outlook. The pound settled at $1.2114, after hitting a three-week low overnight.
The decline in the dollar has been a boon for gold, which is up 1.4% for the week so far at $1,818 an ounce.
Oil prices rose after data showed a larger-than-expected drawdown in US crude inventories, although a massive snowstorm is expected to blanket most of the United States and hit travel-related demand for fuel.
Brent crude rose 42 cents to $82.62 a barrel, while US crude rose 47 cents to $78.76 a barrel.
SM