(Bloomberg) -- The biggest rally in American equities since 2009 flowed powerfully through to Japanese stocks, but had little momentum thereafter, with mixed trading in U.S. and European futures and in emerging Asian stocks. The dollar gave up some of Wednesday’s advance.
Contracts on the S&P 500 swung between modest gains and losses after American benchmarks soared 5 percent on signs of robust consumer spending, easing concern about the tenure of the Federal Reserve chief and progress on U.S.-China trade talks. Tokyo’s Topix Index closed almost 5 percent higher, leading in Asia, while Australian shares rallied 1.9 percent. Hong Kong and Shanghai saw declines, while Korean stocks were little changed. Treasury yields dipped after climbing yesterday. Crude oil also retraced some of Wednesday’s surge.
The jump in Japanese shares, the biggest in two years, followed a sell-off that pushed the Topix gauge into a bear market on Tuesday. The benchmark is still valued at 11.8 times estimated earnings, near the cheapest level since 2012.
“The market right now is very bumpy,” Banny Lam, head of research at CEB International Investment Corp., said on Bloomberg Television. Investors are sifting through “how many policy risks are actually on the table,” he said. For Hong Kong stocks, Lam anticipates renewed declines over the coming quarter, before signs of rebounding Chinese growth stoke gains later in 2019.
Just one of the S&P 500 members fell on Wednesday, when the Dow Jones Industrial Average jumped more than 1,050 points for its biggest-ever point gain. Consumer shares paced the rally, with Amazon.com Inc (NASDAQ:AMZN). jumping 9.5 percent on record holiday sales. Investors also drew comfort from White House adviser Kevin Hassett’s assurance that Fed Chairman Jerome Powell’s job is “100 percent” safe.
‘Choppy Trade’
It’s still a horrible month for U.S. stocks, with the S&P 500 down almost 11 percent. Japan’s Topix is even worse, with a 14 percent slide. Emerging markets have done better, thanks to expectations of less aggressive tightening by the Fed. The Shanghai Composite is off less than 4 percent, for example. And China’s yuan, along with most major Asian currencies, is up against the dollar this month.
“We could still be choppy here and in a bit of a trading range” for stocks, Matt Miskin, a market strategist at John Hancock Financial Services, told Bloomberg Radio. “You’re getting whipsawed from all this different information hitting the markets.” For the S&P 500, he said “we do not see a real sustainable breakout past the prior highs in the near term.”
The yuan was little changed after news that a U.S. government delegation will travel to Beijing in two weeks to hold trade talks with China.
Trading in the U.K. and Europe will resume after a two-day holiday.
And see more analysis in our Markets Live blog.
Here are some events investors may focus on in coming days:
- U.S. new-home sales are due Thursday.
- Baker Hughes releases its weekly data on active U.S. oil rigs on Friday.
- Monday is year end.
- Brazil’s new president is sworn in on Tuesday.
And these are the main moves in markets:
Stocks
- The MSCI Asia Pacific Index jumped 1.8 percent as of 4:09 p.m. in Tokyo.
- Japan’s Topix gained 4.9 percent and the Nikkei 225 rose 3.9 percent at the close.
- Futures on the S&P 500 Index dipped 0.4 percent after rising as much as 0.4 percent. The underlying gauge rose 5 percent at the close in New York, after falling within two points of a bear market earlier in the session. The Nasdaq 100 surged 6.2 percent and the Dow Jones Industrial Average rallied 1,086 points.
- Australia’s S&P/ASX 200 rose 1.9 percent.
- Kospi was flat.
- Hong Kong’s Hang Seng slid 0.4 percent and the Shanghai Composite lost 0.6 percent.
Currencies
- The Japanese yen gained 0.3 percent to 111.05 per dollar after sliding almost 1 percent Wednesday.
- The euro climbed 0.2 percent to $1.1378.
- The pound sterling was up 0.2 percent at $1.2656.
- China’s offshore yuan was little changed at 6.8954 per dollar.
- The Bloomberg Dollar Spot Index dipped 0.1 percent.
Bonds
- The yield on 10-year Treasuries dipped more than 2 basis points to 2.78 percent after climbing almost 7 basis points Wednesday
- Japanese 10-year government bond yields were little changed at 0.023 percent.
Commodities
- West Texas Intermediate crude slid 1.2 percent to $45.7 a barrel after gaining 8.7 percent Wednesday.
- Gold rose 0.2 percent to $1,269.03 an ounce.