SYDNEY, Oct 11 (Askume) – Asian shares are headed for their first decline in five weeks, slightly relieving a sharp rise in Chinese stocks, although all eyes will be on news from Beijing later this week on details of a long-awaited fiscal stimulus package.
Overnight data showed that the US core consumer inflation rate was 0.3% in September, slightly higher than expected, indicating that the Federal Reserve’s effort to tackle inflation has stalled. However, a rise in weekly jobless claims underscored that the Fed is still expected to cut interest rates in November.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.3%, but was expected to end the week down 1.7% after four consecutive weeks of gains. However, the Nikkei share average (.N225) rose 0.6%, taking its weekly gain to 2.6%.
Wall Street futures rose 0.1%. Investors are closely watching the launch of Tesla’s (TSLA.O) long-promised robotaxis late Thursday .
In Asia, South Korea’s central bank raised interest rates by a quarter of a percentage point to kick-start an easing cycle, with South Korean shares (.KS11) rising 0.4% in a widely anticipated decision.
China’s blue-chip stocks (.CSI300) fell 1% on Friday and were down 1.5% for the week. Hong Kong’s Hang Seng Index (.HSI) , which is closed for a public holiday, fell 6.5% this week, its biggest weekly drop in two years.
Lu Ting, chief China economist at Nomura Securities, said the market was “focused” on Saturday’s stimulus announcement.
“Since any specific figures for the additional budget and bond quota will need to be approved by the National People’s Congress or its Standing Committee, and it is highly unlikely that a meeting will be held before the briefing, the market will be eager to know if this can be done,” Lu said.
Overnight, Wall Street was slightly lower while Treasury yields were mixed. Oil was the main driver, with prices rising more than 3% overnight as US fuel use increased ahead of Hurricane Milton and supply risks in the Middle East grew.
Brent crude futures fell 0.5% to $78.95 a barrel on Friday after rising 3.7% the previous day.
Bond yields rose this week as traders lowered expectations for a sharp US interest rate cut.
Atlanta Fed President Raphael Bostic told The Wall Street Journal on Thursday that he is open to cutting rates next month, while others favor a more gradual reduction.
The two-year Treasury yield rose 2 basis points this week to 3.9552%, and the 10-year Treasury yield rose 8 basis points to 4.0628%.
According to CME’s FedWatch, traders still believe the probability that the Fed will cut interest rates by 25 basis points next month is about 83%, and the probability that it will keep interest rates unchanged is 17%.
JPMorgan analysts said, “We believe the Federal Open Market Committee (FOMC) is on the right track to adjust policy interest rates, having reduced policy rates by 25 basis points in November. But our forecast for further easing in December is now on track. Challenged by strong growth and inflation data.
Currency markets were less volatile on Friday. The dollar is set for a second straight week of gains, trading near a two-month high against major rivals.
The euro fell 0.4% this week to $1.0934, on expectations that the European Central Bank could cut interest rates in October and December.
Gold prices last rose 0.15% to $2,633.31 per ounce, still above the crucial $2,600 level.
