(Bloomberg) -- Asian equities were set to drift higher, tracking US shares while currency markets grappled with fresh signs Donald Trump will impose tariffs on Canada and Mexico.
Stocks in Australia opened higher while futures for Japan also climbed. A measure of US-listed Chinese companies soared 4.3% as many markets across Asia including mainland China, Hong Kong and Taiwan remained closed for the Lunar New Year holiday.
US equity futures rose early Friday after the S&P 500 and Nasdaq 100 each edged 0.5% higher Thursday in choppy trading. Apple shares fell during the session but rose in post-market trading following results that showed revenues exceeding estimates.
Earnings for mega-cap tech companies face heightened scrutiny given the heavy selling in stocks associated with artificial intelligence earlier this month. Nvidia shares rose Thursday but remained on track for the worst week since September.
“This bull market is still ‘breathing,’ and we should expect more stock participation in the months ahead if the economy cooperates and rates quiet down,” said Callie Cox at Ritholtz Wealth Management. It’s not that the AI story is “doomed,” but “there are so many opportunities in unloved sectors that have been ignored for so long.”
In the foreign exchange market, the currencies of Mexico and Canada slumped on Thursday after President Donald Trump said he would follow through on his threat to impose 25% tariffs on imports from both countries as early as Saturday. Trump cited the flow of fentanyl and large trade deficits as among the reasons for the decision. Trump also reiterated possible levies on China.
Elsewhere in currencies, the yen advanced to 154 per dollar Thursday as comments from Bank of Japan Deputy Governor Ryozo Himino reaffirmed views that the central bank will keep raising rates this year.
The euro was steady after declining against the dollar while German bonds maintain gains after the European Central Bank lowered interest rates as expected.
Meanwhile, Australian and New Zealand yields were slightly lower Friday after Treasuries were left little changed in the prior session. The US 10-year yield fell one basis point to 4.51% Thursday and a gauge of the dollar steadied after earlier gains.
In Asia, data set for release Friday includes producer prices in Australia, money supply in Singapore and trade balance of payments for Thailand. Attention will then shift to the Fed’s favored inflation gauge, the personal consumption expenditures index, due later Friday. It’s expected to show a small acceleration in price hikes by increasing 2.6% from a year earlier, up from 2.4% in the previous month, according to the median forecast of economists surveyed by Bloomberg.
Gold touched a record high at around $2,794 per ounce Thursday. Oil prices also gained, leaving West Texas Intermediate, the US benchmark, at around $73 per barrel.
PCE Index
Monthly US household spending figures on Friday will likely point to momentum heading into 2025. Economists also expect the personal income and spending report to show a slight pickup in the personal consumption expenditures index from a month earlier.
“Friday’s PCE is likely to show that inflation is still elevated and above the Fed’s target, and it comes at a time when markets are hyper jittery about a trifecta of other issues, including big tech, AI and Federal Reserve uncertainty,” said Carol Schleif at BMO Private Wealth.
The US economy expanded at a solid pace at the end of 2024, despite drags from a strike at Boeing Co. and much leaner inventory investment. Consumer spending, which comprises the largest share of economic activity, advanced at a 4.2% pace — the first time since late 2021 that outlays have exceeded 3% in consecutive quarters. The acceleration was the biggest since early 2023 and was led by a pickup in motor vehicle sales.
“Overall, the economy is on firm footing heading into 2025, which should support risk assets given the strong linkage between economic growth and corporate profits,” said Josh Jamner at ClearBridge Investments.
The Federal Open Market Committee on Wednesday left interest rates unchanged as expected — after cutting them at each of their three previous meetings since September — and indicated that stalled progress toward lower inflation warranted a patient approach.
“‘Remaining patient’ and ‘no rush’ seem to be how the FOMC plans on operating into the middle of the year, with a bumpy path for inflation giving the Fed pause before reading too much into gains that could prove idiosyncratic,” said Marvin Loh and Hope Allard at State Street Global Markets.
Key events this week:
Some of the main moves in markets:
Stocks
Currencies
Cryptocurrencies
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.