Global Markets: Asian shares hit two-week high on Fed pause bets, China boost

Asian equities rose on Wednesday and the dollar wobbled as weak U.S. labour data bolstered bets that the Federal Reserve was likely done with its interest rate hikes, while beaten-down China stocks rose for a third straight day. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.86% to a two-week top and is on a three-day winning streak. The index though is down 6% in August and set for its worst monthly performance since February.

Japan’s Nikkei was up 0.5%, while the Australia’s S&P/ASX 200 index rose 0.64%. China shares have gained this week following the announcement of measures to lift investor confidence, including halving the stock trading stamp duty, loosening margin loan rules, and putting the brakes on new listings.

Investors’ focus will be on PMI data from China later this week that will highlight the state of the economy. Overnight, Wall Street ended sharply higher, while Treasury yields slid to three-week lows after data showed U.S. job openings dropped to the lowest level in nearly 2-1/2 years in July, signalling easing labour market pressures.

“‘Bad news is good news,’ as the data supported bets for a sooner end of the Fed’s hiking cycle despite the recent hawkish rhetoric of Fed Chair Powell,” Tina Teng, markets analyst at CMC Markets, said in a note.

With the Fed highlighting that the interest rate path will be heavily dependent on data, traders are tweaking their bets based on the latest indicators. Markets are pricing in an 89% chance of the Fed standing pat at its meeting next month, the CME FedWatch tool showed, and are now pricing in a 50% chance of another pause at the November meeting compared with a 38% chance a day earlier.

A much clearer economic picture will likely be revealed later in the week when U.S. payrolls and personal consumption expenditure reports are due.

U.S. Treasury yields were stable in Asian hours. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 1.3 basis points at 4.903%, easing away from the three week low of 4.871% it touched on Tuesday.

The drop in yields put pressure on a buoyant dollar. Against a basket of currencies, the dollar inched up 0.029% to 103.58 after slipping nearly 0.4% on Tuesday.The yen weakened 0.15% to 146.09 per dollar and remained at levels that led to intervention in the currency market last year by Japanese authorities.

The Australian dollar fell 0.32% to $0.646 after data showed Australian consumer price inflation slowed to a 17-month low in July, signalling that interest rates might not have to rise again.

U.S. crude rose 0.32% to $81.42 per barrel and Brent was at $85.69, up 0.23%. Both benchmarks rallied more than a dollar a barrel on Tuesday on a soft dollar.Traders will be closely watching cocoa prices on Wednesday after the London cocoa futures on ICE rose to a 46-year high on Tuesday, buoyed by tightening supplies.

Top cryptocurrency bitcoin eased a bit in early Asian hours to trade at $27,554 after rising 7% on Tuesday. A federal appeals court ruled on Tuesday that the U.S. securities regulator was wrong to reject an application from Grayscale Investments to create a spot bitcoin exchange-traded fund.

Maruti Suzuki shares surge 0.9% on news of production doubling and new CFO appointment

The stock price of the leading auto company, Maruti Suzuki, surged nearly 0.90% today after the company announced its ambition to double its production capacity to 40 lakh units over the next eight years at its annual general meeting (AGM) on August 29. The company has also announced its intention to consider a stock split in response to shareholders’ requests and plans to invest Rs 45k crore to increase its production.

The company has further announced the appointment of Arnab Roy, as its new Chief Financial Officer. Roy has previously worked with Schneider Electric, G4S Corporate, GE, Covidien, Herbalife, Genpact, and The Timken Company. He is scheduled to assume the responsibilities starting as the CFO – Designate with effect from 16th October 2023, and full-time CFO of the Company with effect from 01st January 2024.

Himanshu Singh has further recommended buying shares of Maruti Suzuki with a target price of Rs 11,100.

Maruti Suzuki’s market capitalization stands at Rs 290,196.23 crore. The P/E ratio is 29.92, and the dividend yield is 0.94%. The stock price of Maruti Suzuki has gained 1.4% in the last one week while it slipped 0.5% in the last one month. It has further gained 11.6% in the last 6 months and 8.9% in the last one year. The 52-week high for the stock is at Rs 10,036.95 on July 5, 2023, whereas the stock hit the 52-week low of Rs 8,076.05 on November 26, 2022.