Sydney – Wednesday was a mixed day for Asian stocks. Investors were cautious about China because of the Party Congress, which is still going on. On the other hand, European markets are expected to continue to be optimistic about earnings before British inflation numbers come out.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan reversed earlier gains and is now 0.5% lower. This is because Chinese blue chips fell 1.2% and Hong Kong’s Hang Seng index fell 1.4%.
Other markets also went up. Japan’s Nikkei went up 0.5%, and Australia’s resources-heavy shares went up 0.3%, following Wall Street’s rise.
The Euro Stoxx 50 futures for the whole region went up by 0.6%.
Futures for the U.S. S&P 500 went up 0.7% and futures for the Nasdaq went up 1.0%. Netflix Inc. (NASDAQ:NFLX) stopped losing customers, which had hurt its stock this year, and said it expected more growth in the future. This made its shares go up 14% in after-hours trading.
Stocks in the United States went up because Goldman Sachs Group, Inc. (NYSE:GS), Johnson & Johnson (NYSE:JNJ), and Lockheed Martin (NYSE:LMT) all did better than expected in their most recent quarters. The Dow Jones and the S&P 500 both went up by 1%.
Shane Oliver, chief economist at AMP (OTC:AMLTF) Capital, said, “Even though shares have found technical support in recent days and could continue to rise, near-term downside risks for shares remain high.”
Chris Turner, the global head of markets at ING, said that a quiet week for U.S. data could also make the dollar’s correction last a little longer.
But the fact that the Fed and other central banks are raising interest rates in the face of an impending recession should mean that the core dollar bull trend stays the same.
The U.S. dollar gained 0.2% against a group of major currencies on Wednesday. Overnight, it hit a new 32-year high of 149.34 yen, but then it went down to 149.28 because the Japanese government might step in. [FOREX]
After a slight drop in the previous session, the pound rose 0.12% against the dollar to trade at $1.1333.
The UK has been shaken up by a historic crisis in the government bond market. Inflation numbers for September will be released later in the day, and it is likely that annual inflation ran at a double-digit 10% rate last month.
This would probably put pressure on the Bank of England to raise rates faster. The Bank of England (BoE) said on Tuesday that it will start selling some of its huge stock of British government bonds starting on November 1. However, it will not sell any longer-term gilts this year.
“As opinions and market prices change quickly about what the Bank of England will do with interest rates on November 2, today’s September UK inflation data will be a key point of reference,” said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY).
Tuesday’s unexpectedly high inflation report from New Zealand caused the markets to sharply change how fast they thought the Reserve Bank of New Zealand would tighten.
On Tuesday, oil prices fell more than 3% because people were worried that the U.S. would make more oil and that China’s economy would slow down. On Wednesday, however, oil prices went back up a little bit.
Brent crude futures went up 0.4% to $90.39 per barrel, while U.S. West Texas Intermediate (WTI) crude went up 0.9% to $83.58 per barrel.
A senior administration official said that U.S. President Joe Biden will announce on Wednesday a plan to sell the last of the oil from the nation’s emergency oil reserve by the end of the year. He will also explain how the stockpile will be refilled when prices go down.
After going down, yields on U.S. Treasury bonds went up a little bit on Wednesday.
The yield on benchmark 10-year notes went up by three basis points to 4.0317%, and the yield on two-year notes went up from 4.4370% to 4.4543%.
Gold went down a little bit. One ounce of spot gold was worth $1,645.81. [GOL/]