Japan stocks hit 34-year high, global markets calm before US inflation
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[January 10, 2024] By
Harry Robertson and Tom Westbrook
LONDON/SINGAPORE (Reuters) -Japanese stocks hit a 34-year high on
Wednesday while global equities, the dollar and bonds held steady before
U.S. inflation data on Thursday.
Bitcoin stabilized after spiking when an unauthorized post from the U.S.
Securities and Exchange Commission's X account said it had approved
bitcoin exchange-traded funds.
Japan's Nikkei - which had its best year for a decade in 2023 - climbed
2% to break above 34,000 for the first time since 1990. Exporters led
the charge, helped by a softening yen after data showed Japanese real
wages shrank for a 20th month in November.
"Japan is really interesting," said Duncan MacInnes, an investment
director at British firm Ruffer. "The problems have been corporate
governance, which is definitely improving, (and) it has tended to be a
very cyclical market, so it gets hit especially hard when the market
turns down."
The pan-European Stoxx 600 index was flat in early trading, while
Britain's FTSE 100 was 0.19% lower and Germany's DAX index was up 0.2%.
Futures for the U.S. S&P 500 were up 0.19% after the index dipped 0.15%
on Tuesday, as investors waited for the inflation figures and for the
start of company earnings season. Nasdaq 100 futures were 0.37% higher.
![](http://archives.lincolndailynews.com/2024/Jan/10/images/ads/current/lcdj_sda_LUAL_2023.png)
U.S. and European markets surged at the end of 2023 as inflation cooled
quicker than expected and central banks struck a softer tone,
encouraging investors to bet on big rate cuts this year.
The optimism about falling borrowing costs has waned slightly in January
and the S&P 500 is down around 0.3% so far after rallying 24% last year.
The index which tracks the U.S. dollar was flat. The U.S. currency has
risen around 2% since hitting a five-month low in late December.
Bitcoin was last down 1.3% at $45,540 after spiking as high as $47,897
on the false reports of ETF approvals. The SEC said it had not yet
approved a spot bitcoin ETF and that someone had accessed its X social
media account without authorization.
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![](../images/011024PIX/busine49.jpg)
Passersby walk past an electric monitor displaying the Japanese yen
exchange rate against the U.S. dollar outside a brokerage in Tokyo,
Japan October 4, 2023. REUTERS/Issei Kato/File Photo
![](http://archives.lincolndailynews.com/2024/Jan/10/images/ads/current/peasley_lda_051513.png)
INFLATION IN FOCUS
The crucial event for markets this week is U.S. consumer price index
inflation data on Thursday, which could cause traders to adjust
their bets on rate cuts.
Economists polled by Reuters see year-on-year inflation at 3.2% in
December, up from 3.1% in December. But they think core inflation
likely fell to 3.8%, its lowest since mid-2021, from 4%.
Interest rate futures are pricing around 140 basis points of U.S.
rate cuts this year. The probability of a move in March has been
pared somewhat to a still-high 68%.
"Market pricing... has gotten a little bit ahead of itself," Jeff
Klingelhofer, co-head of investments and managing director at
Thornburg Investment Management, told journalists on an outlook call
on Wednesday.
"If you look at history - five (25 bp) cuts is very consistent with
a recession, but markets aren't pricing in a recession."
Benchmark 10-year Treasury yields were last down 3 basis points in
European trading on Wednesday at 3.991%. They move inversely to
prices and have risen this year after plunging in November and
December.
Geopolitical tensions were also on the radar as disruptions in the
Red Sea and a production outage in Libya raised oil prices, and an
election looms in Taiwan.
Brent crude oil futures rose 1.9% on Tuesday and were up 0.4% to
$77.91 a barrel early on Wednesday. [O/R]
The euro was up 0.14% at $1.095, while the dollar was 0.3% higher
against the yen.
(Reporting by Harry Robertson in London and Tom Westbrook in
Singapore; Editing by Muralikumar Anantharaman and Tomasz Janowski)
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