Stocks Rise Amid Signs Rally Broadening, Yuan Dips: Markets Wrap

(Bloomberg) — Stocks rose, led by gains in Japan, amid signs a rally in global equities is broadening into the year-end. The yuan slipped after China set its daily reference rate for the currency at a level that was significantly weaker than estimated by traders and analysts.

MSCI Inc.’s gauge of Asian equities climbed 0.8% to head for its best day in about a week, with cyclical sectors such as industrials and financials among the top contributors to gains. European equity futures also rose while US stock futures were steady after the S&P 500 climbed 0.3% overnight.

The Topix and Nikkei 225 rallied at least 1.9% each while tech-heavy gauges in South Korea and Taiwan underperformed. Data on Wednesday showed US companies shed payrolls in November by the most since early 2023, reinforcing concerns about a more pronounced labor market weakening. Swaps pricing indicated rising bets for a December cut Wednesday, with traders assigning more than a 90% chance to a 25-basis-point reduction.

“The relief over the US November ADP employment data and growing hopes for the Fed’s rate cut next week seem to be contributing to a better sentiment,” said Homin Lee, a senior macro strategist at Lombard Odier Singapore.

Materials and energy have been the top-performing sectors on the MSCI Asia Pacific Index over the past one month, while a sub-gauge of tech stocks has declined nearly 4%. In the US, where the S&P 500 is back within spitting distance of an all-time high, Big Tech isn’t leading the rebound this time.

In currency markets, the People’s Bank of China set the so-called fixing at 7.0733 per dollar, 164 pips lower than the average estimate in a Bloomberg survey. The yuan fell 0.1% in both onshore and overseas trading. Before Thursday, the Chinese currency had been inching toward the key psychological level of 7 amid a rally in local stocks and a slump in the dollar due to concerns over US’s fiscal conditions.

The yen edged higher against the dollar and Japan’s 10-year bond futures fell following a Reuters report the nation’s central bank is likely to raise interest rates in December. Meanwhile the Indian rupee fell to a record low against the dollar as sentiment remained weak amid delays in securing a trade deal with the US.

Japanese government bonds were also in the spotlight on Thursday. Yields in Japan, which have been surging due to renewed fiscal concerns and on bets for a potential rate hike at the Dec. 19 BOJ policy decision, fell as a 30-year auction drew the strongest demand since 2019. That came after a sale of 10-year notes earlier in the week also drew firm demand.

What Bloomberg’s Strategists Say…

“JGB investors seem to have found the yield level they love for 30-year bonds, with a huge 4.04 bid-to-cover ratio. That is the highest demand since 2019, with the low price well above the pre-sale forecast, which is another positive signal. Moreover, Nomura was the biggest buyer — typically a sign of long-term investors getting involved.”

— Mark Cranfield, Markets Live strategist. Click here for the full analysis.

Bond yields moved higher in some other major Asian markets. Those in Australia rose to the highest level this year amid growing speculation the central bank will switch back to raising rates to curb inflation. China’s 30-year bond yield also headed toward the highest level since last November as investors withdrew from fixed-income funds, underscoring jitters ahead of high-level government meetings in Beijing that may shape policy into 2026.

Elsewhere, Bitcoin hovered around $93,000 after a two-day rally. Silver and gold prices fell while oil advanced.

Trade and geopolitics were also on investors’ radar as French President Emmanuel Macron and Chinese leader Xi Jinping met in Beijing on Thursday, where they would discuss a range of issues including economic ties, trade tensions, Taiwan and the war in Ukraine. Commerce Secretary Howard Lutnick said that the US is expecting a large investment pledge from Taiwan in trade talks.

Fed Outlook

US Data on Wednesday showed services activity expanded at a slightly faster pace, while a measure of prices paid dropped to a seven-month low.

Before their final policy meeting of the year, Fed officials will get a dated reading on their preferred inflation gauge. On Friday, the September income and spending report is due to be released — long delayed because of the government shutdown.

The figures will include the personal consumption expenditures price index and a core measure that excludes food and energy. Economists project a third straight 0.2% increase in the core index. That would keep the year-over-year figure hovering just below 3%, a sign that inflationary pressures are stable, yet sticky.

“Right now, the data argues for additional Fed funds rate cuts. US labor demand is weak, consumer spending is showing early signs of cracking, and upside risks to inflation are fading,” said Elias Haddad at Brown Brothers Harriman & Co.

Corporate News

Cambricon Technologies Corp. plans to more than triple its production of AI chips in 2026, aiming to wrest market share from Huawei Technologies Co. in China and fill a void left by Nvidia Corp.’s forced exit. Paramount Skydance Corp. more than doubled the proposed breakup fee in its offer to acquire Warner Bros. Discovery Inc. to $5 billion, according to people familiar with the company’s offer, part of a sweetened proposal designed to outshine rival bids. Singapore’s stock exchange is considering buying Cboe Global Markets Inc.’s Australian unit, the Australian Financial Review reported. On one of Larry Fink’s frequent trips to Australia, the BlackRock Inc. chief sized up a boutique finance firm run by an Olympic swimming champ — a prelude to a A$25 million ($16.5 million) play to crack open one of the world’s richest retirement systems. Hong Kong builder New World Development Co. failed to get full support from creditors in a key bond-exchange plan that required them to accept cuts in the value of their holdings. Microsoft Corp. slid 2.5% on a report of lower demand for some artificial-intelligence tools even as the company said aggregate sales quotas for AI products have not been reduced. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 7:09 a.m. London time Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average rose 0.1% The MSCI Asia Pacific Index rose 0.8% The MSCI Emerging Markets Index rose 0.2% S&P/ASX 200 futures were little changed Hong Kong’s Hang Seng rose 0.7% Euro Stoxx 50 futures rose 0.7% Currencies

The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.1658 The Japanese yen was little changed at 155.32 per dollar The offshore yuan was little changed at 7.0631 per dollar The British pound fell 0.1% to $1.3336 Cryptocurrencies

Bitcoin fell 0.7% to $93,081.89 Ether rose 1% to $3,198.23 Bonds

The yield on 10-year Treasuries advanced two basis points to 4.08% Germany’s 10-year yield was little changed at 2.75% Britain’s 10-year yield declined two basis points to 4.45% Australia’s 10-year yield advanced six basis points to 4.70% Commodities

Spot gold fell 0.3% to $4,189.09 an ounce West Texas Intermediate crude rose 0.7% to $59.37 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Aya Wagatsuma, Winnie Hsu and Richard Henderson.

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