Asian Stock Market: Traces Wall Street’s run-up amid stimulus hopes, dicey yields

• Asian equities remain firmer while tracking their global counterparts.
• Comments from BOJ, PBOC policymakers’ add strength to the optimism despite firmer US/China CPI.
• IMF urges Asian central banks to tighten monetary policy.
• Covid woes, political hustle and fears of higher rates keep buyers cautious ahead of the key US data.

Shares in the Asia-Pacific region remain firmer on early Friday as policymakers push back calls for higher rates, as well as suggest more stimulus. Adding to the market’s recovery could be the upbeat performance of Wall Street despite a stronger US inflation print.

While portraying the mood, the MSCI’s index of the Asia-Pacific shares outside Japan rebounds from the 31-month low whereas Japan’s Nikkei 225 rises 3.42% by the press time.

Earlier in the day, Japanese Finance Minister (FinMin) Shunichi Suzuki and Bank of Japan Governor (BOJ) Haruhiko Kuroda resisted while signaling any market invention to come from Japanese policymakers due to the latest slump in the yen. “Want to take appropriate action versus excess fx volatility,” said FinMin Suzuki when asked whether Japan could intervene to prop up the yen. BOJ’s Kuroda, on the same line, mentioned that the pace of Japan's economic recovery still slow so BOJ must continue supporting the economy.

Additionally, People’s Bank of China (PBOC) Governor Yi Gang mentioned, “The PBOC has room to adjust policy given the inflation rate in China is well within target.” The policymaker also signaled multiple moves, mostly suggesting more stimulus for infrastructure and housing, to provide stronger support for the real economy.

It’s worth noting that China’s headline Consumer Price Index (CPI) matched upbeat market forecasts by rising 2.8% in September while the Producer Price Index (PPI) fell short of meeting expectations during the stated month, down to 0.9% versus 1.0% forecasts and 2.3% prior.

Amid these plays, Chinese stocks appear the second in the winning league, after Japan’s Nikkei, which in turn favors equities in Australia and New Zealand.

In addition to the stimulus hopes at home and mixed data, the UK government’s U-turn tax cut, as well as ongoing covid woes in China and Europe, are also some of the key catalysts that directed Asian markets.

On a broader front, US 10-year Treasury yields keep the late Thursday’s pullback from the highest levels since October 2008 while the two-year and 30-year bond coupons also retreat from the multi-year tops by the press time. That said, the S&P 500 Futures also extend the bounce off monthly low with 0.60% intraday gains at the latest.

Moving on, US Retail Sales for September, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October are important to watch for clear directions.