Asian equities are set for minor gains following a fluctuation in US stocks and a fall in Treasuries, influenced by data supporting the Federal Reserve's stance on higher interest rates. Australian and Japanese futures indicate a 0.3% rise, while Hong Kong futures remain stable. Tech stocks, including Nvidia Corp . (NASDAQ:NVDA), were impacted by US restrictions on chip sales to China, leading a downturn that caused the S&P 500 to lose its gains.
Two-year Treasury yields reached their highest since 2006 as traders predict more than a 60% chance of a quarter-percentage-point interest rate hike in January. Edward Moya from Oanda suggested that positive economic data is viewed negatively as it implies continued monetary tightening by the Federal Reserve.
US retail sales and industrial production surpassed expectations last month, demonstrating a robust American consumer market aiding manufacturing stabilization. This prompted economists from Goldman Sachs, JPMorgan Chase & Co. (NYSE:JPM), and Morgan Stanley to raise their third-quarter GDP forecasts.
Geopolitical events are also impacting markets. The escalating conflict between Israel and Hamas has caused oil prices to increase. Arab leaders canceled a meeting with President Joe Biden following an explosion at a Gaza City hospital amid Biden's planned visit to Israel after a recent Hamas attack. This incident pushed up oil prices by 1.3% in early Asia trading.
The Gaza City hospital explosion, which Hamas officials blame on an Israeli airstrike, resulted in hundreds of Palestinian deaths. In response, the Bank of Israel is focusing on stabilizing the shekel after it hit an eight-year low, contradicting trader expectations of an imminent significant interest-rate cut.
In other news, the Bank of Japan is expected to discuss raising its inflation forecast for fiscal years 2023 and 2024, further extending its timeline for achieving a 2% inflation target.
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