From Central Banks to Macroeconomics

On Tuesday, the rate-sensitive tech stocks sent the Nasdaq Composite Index rallied 2.37%. The Dow and S&P 500 ended the day up 1.43% and 1.91%, respectively. 10-year US Treasury yields responded to the numbers, sliding by 4.11% to end the session at 4.451%, the lowest close since September 22, 2023.

From the Asian economic calendar, economic indicators from Japan failed to spook investors. A more marked contraction than expected fueled bets on the Bank of Japan keeping monetary policy ultra-loose.

However, economic indicators from China supported the appetite for riskier assets. Better-than-expected retail sales and industrial production numbers suggested Beijing stimulus measures were taking effect.

US Retail Sales Support Bets on a Soft Landing

On Wednesday, the US equity markets had a positive session. US retail sales and producer prices supported the appetite for riskier assets. US retail sales fell less than expected while producer prices signaled easing demand-driven inflationary pressures.

The Fed ending its rate hike cycle amid falling inflationary pressures increases the chance of an H1 2024 Fed rate cut.

On Wednesday, the Nasdaq Composite Index and S&P 500 rose by 0.07% and 0.16%, with the Dow gaining 0.47%. An upswing in 10-year US Treasury yields capped the upside. Yields increased by 1.84% to 4.533%.

The modest US equity market gains may set a cautious tone for the Asian session. However, the Asian economic calendar warrants consideration.

This morning, machine orders from Japan beat forecasts, with trade data suggesting a possibly improving demand environment. Japanese imports rose by 1.4% in October after falling in September. Exports rose at a more modest pace.

For the ASX 200, Australian employment figures could influence sentiment toward RBA monetary policy.

Futures Market Signal a Cautious Thursday

The futures markets signaled a negative start to the Thursday session. The ASX 200 and the Nikkei were down 9 and 60 points, respectively.

ASX 200