Asia markets set to rise as concerns over higher U.S. interest rates linger

Jihye Lee & Lim Hui Jie

Asia-Pacific markets are set to rise on Friday after Wall Street’s rally overnight as investor concerns over higher U.S. interest rates continued to linger.

Japanese markets are set to open higher, with the Nikkei futures contract in Chicago at 27,710, and its counterpart in Osaka at 27,700 against the Nikkei 225′s last close at 27,498.87.

In Australia, the S&P/ASX 200 opened up 0.24%.

Key economic data is set to come out across the region, with Japan seeing its unemployment rate for January come in at 2.4%, the lowest level since February 2020.

The country will also see the release of its services purchasing managers index for February by au Jibun Bank.

China will release its services PMI data for February from Caixin, while a private survey on factory activity for February will be out in India on Friday.

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE
.N225	Nikkei 225 Index	*NIKKEI	27498.87	0	0
.HSI	Hang Seng Index	*HSI	20429.46	0	0
.AXJO	S&P/ASX 200	*ASX 200	7279.9	24.5	0.34
.SSEC	Shanghai	*SHANGHAI	3310.65	0	0
.KS11	KOSPI Index	*KOSPI	2427.85	0	0
.FTFCNBCA	CNBC 100 ASIA IDX	*CNBC 100	8126.6	27.64	0.34

Overnight in the US, stocks were initially under pressure as the trading day started, but rallied in the afternoon after Bostic’s remarks.

The Dow Jones Industrial Average led gains among the major U.S. indexes, rising 1.05%, while the S&P 500 and Nasdaq Composite closed 0.76% and 0.73% higher.

— CNBC’s Tanaya Macheel and Samantha Subin contributed to this report.

Fed’s Bostic says he’s ‘firmly’ in favor of sticking with quarter-point hikes

Atlanta Federal Reserve President Raphael Bostic said he thinks the central bank can stick with quarter-point interest rate hikes.

“I am still very much of a mindset that slow and steady is going to be the appropriate course of action,” Bostic told media members. He added that he favors rate hikes of 0.25 percentage point, a step down the Fed took at its meeting a month ago.

“Right now I’m still in very firmly in the quarter point move pacing,” he added.

Some other Fed officials have said they are open to hiking by half a point when they meet later this month. Market pricing currently points to that move, though the probability for a half-point increase has risen in recent days.

—Jeff Cox

10-year Treasury yield poised to move higher, says Credit Suisse

Now that the 10-year Treasury yield has broken above the 4% psychological barrier, it should continue to move higher, according to Credit Suisse.

“This should open up a deeper rise within what we now expect to be an even broader range. Next supports are seen at 4.11%, then the 4.325% October high,” analyst David Sneddon wrote in a note Thursday.

The yield on the benchmark 10-year was last up nearly 8 basis points to 4.073%.

—Michelle Fox

S&P 500 trading near key level that could signal more declines

The S&P 500 has been flirting with its 200-day moving average, and a drop below that level could signal more selling.

The 200-day was at about 3,940 Thursday, and the index fell below that level but recovered Wednesday. The S&P 500 was trading near that level Thursday morning.

The 200-day is literally the average of the last 200 closing prices, and it is viewed as a momentum indicator for a stock or index. Stock chart analysts would view it as a negative signal if the index were to close below that level and stay below it.

—Patti Domm

Implied probability of U.S. debt default at highest since 2013, MSCI says

Credit-default swap (CDS) trading on U.S. Treasury bonds has picked up since January, with implied default probabilities increasing “to levels not seen since the 2013 debt-ceiling debate,” MSCI researchers Andras Rokob and Andy Sparks wrote in a blog post Thursday.

CDS spreads have widened out in 2023, echoing similar moves in both 2011 and 2013, during two other episodes that saw battles between Congress and the White House over raising the U.S. debt ceiling, the researchers wrote.

“Assuming a 95% recovery, the CDS market’s one-year implied default probability was 11.3%, as of Feb. 24, up significantly from the 3.3% probability prevailing at the beginning of the year,” MSCI said. “The consequences of a potential default by the U.S. government extend beyond the immediate impact on holders of Treasurys,” Rokob and Sparks warned. “Major market dislocation and a sharp slowdown in economic activity could both be realistic possibilities.”

— Scott Schnipper; CNBC’s Jeff Cox contributed to this report

Source: cnbc