Asian Stocks Point Higher as US Shutdown Nears End: Markets Wrap

(Bloomberg) — Asian stocks were poised for modest gains after Wall Street rose on optimism that the US government shutdown will soon end, reviving access to data that may clarify the Federal Reserve’s outlook.

Equity-index futures for Hong Kong climbed while those for Japan were a tad lower. Australian shares edged up at the open. The S&P 500 erased earlier losses to close 0.2% higher, even as the tech-heavy Nasdaq 100 fell 0.3%. Nvidia Corp. sank 3% as SoftBank Group Corp. sold its entire stake in the chipmaker to help bankroll artificial-intelligence investments.

The record US shutdown may end as soon as Wednesday after the Senate passed a temporary funding bill, with economists bracing for a flood of delayed data once agencies reopen. Despite the disruption, the S&P 500 has gained around 2% since the shutdown began, outperforming the average during past shutdowns, CFRA data show.

“We are buyers of this dip and maintain our tactical bullish call,” says the JPMorgan Market Intelligence team led by Andrew Tyler. “The biggest near-term catalyst would be a reopening of the government which would buttress current-quarter GDP forecasts but also may release more liquidity into the market, which typically is supportive of stocks.”

With trading in cash Treasuries closed due to the Veterans Day holiday, futures on 10-year notes rallied and the dollar fell after private-sector employment figures from ADP Research signaled a slowing US jobs market. Money markets also added to bets on Fed rate cuts, pricing more than a 60% chance of a reduction next month. The yen stabilized around the 154 per dollar level after surging following the ADP release.

Gold climbed above $4,100 an ounce, while Brent crude oil traded over $65 a barrel.

Reopening the government now depends on the House, which plans to return to Washington to consider the spending package. It would keep most of the government open through Jan. 30 and some agencies through Sept. 30.

If approved, the bill goes to President Donald Trump, who has already endorsed the legislation.

Back in 2013, which was the last shutdown to affect the jobs report, the government reopened on October 17, and the September jobs report was released five days later, noted Jim Reid at Deutsche Bank

“So based on that timeline, we could get the September jobs report pretty quickly, not least because the original release was meant to be on Oct. 3, just a couple of days after the shutdown began,” he said. “Early next week is realistic.”

The resumption of economic data releases could make the case for increased wagers on Fed rate cuts. Most economists surveyed by Bloomberg suggest that Fed officials will lower borrowing costs by a quarter-point at their Dec. 9-Dec. 10 meeting. But the central bank’s path remains foggy after Chair Jerome Powell last month said a cut is not a certainty, a sentiment since shared by others at the Fed.

“The collective commentary suggests a continued significant split within the Committee’s views, and the bar for a December rate cut has demonstrably risen,” Deutsche Bank economists including Amy Yang and Matthew Luzzetti wrote earlier this week.

While tech stocks fell Tuesday, earnings from big tech have provided a lot to like for the AI trade with investors now looking forward to hearing from the industry’s biggest bellwether — Nvidia. That will be the next key event for markets once the smoke clears on the US shutdown front.

The maker of graphics processing units used in AI computing is scheduled to report on Nov. 19 and expectations are high — especially after Chief Executive Officer Jensen Huang gave a strong outlook for growth at a recent event.

“Tech stocks are going to continue to determine the direction of the stock market going forward whether investors like it or not,” said Matt Maley at Miller Tabak.

Meanwhile, in commodities, oil climbed as signs of a softer crude market were countered by surging premiums for fuels like gasoline and diesel. Gold pared gains as traders weighed a possible end to the shutdown.

Corporate News:

Advanced Micro Devices Inc., Nvidia Corp.’s nearest rival in AI chips, predicted accelerating sales growth over the next five years, driven by strong demand for its data center products. A group of investors led by Macquarie Group Ltd. is expected to acquire infrastructure services business Potters Industries from private equity firm TJC, in a deal valuing the company at approximately $1.1 billion. JD.com Inc. said orders surged nearly 60% during this year’s Singles’ Day event. South Korea’s POSCO Holdings Inc. will buy a 30% stake in Mineral Resources Ltd.’s lithium business in a deal worth $765 million. Sea Ltd.’s quarterly profit missed analysts’ estimates after the company boosted spending to battle competitors in Southeast Asia’s cutthroat e-commerce market. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 8:22 a.m. Tokyo time Hang Seng futures rose 0.4% Australia’s S&P/ASX 200 rose 0.1% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1582 The Japanese yen was little changed at 154.15 per dollar The offshore yuan was little changed at 7.1216 per dollar The Australian dollar was little changed at $0.6531 Cryptocurrencies

Bitcoin rose 0.5% to $103,116.65 Ether rose 0.5% to $3,432.14 Bonds

Australia’s 10-year yield declined two basis points to 4.37% Commodities

West Texas Intermediate crude was little changed Spot gold rose 0.2% to $4,136.58 an ounce This story was produced with the assistance of Bloomberg Automation.

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