Marketmind: Rallying Nikkei on the cusp of a breakout

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Alden Bentley, U.S. Breaking News Editor for Finance and Markets.

A question for Asia traders on Tuesday looks to be: Does the have the oomph to reclaim the three-decade high set Monday before profit taking kicked in, amid a reluctance to overextend before market liquidity dries up for the holidays at the end of the week.

The rise of the benchmark Japanese share index to its highest intraday level since March 1990 on Monday crowned an 8% rally so far this month and the Nikkei is on track for its heftiest monthly gain in three years thanks to strong earnings and offshore demand.

Meanwhile, the resurgent yen in U.S. trade firmed to a 6-1/2-week high against the dollar at 148.10 after last week’s rally pulled dollar/yen down to its lowest since early October.

Chinese blue chips .CSI300 eked out a 0.2% gain as the country’s central bank held rates steady as expected, but set a firm fix for the yuan that saw the dollar slip under 7.2000 to a three-month low. It stayed soft during U.S. trading, where it last was quoted midmorning at 7.1680 yuan.

Asia awakens to another solid advance on Wall Street, notably tech stocks and a record high for Microsoft (NASDAQ:) after CEO Satya Nadella said OpenAI chief Sam Altman is set to join the company to lead a new advanced AI research team.

On Friday, the main U.S. stock indexes posted gains for the third week in a row as evidence of easing U.S. inflation supported bets that the Fed was done raising interest rates.

The benchmark is now less than 2% away from its highest level this year that was reached in July. Treasury yields ticked lower on a solid 20-year note auction and anticipation that inflation will decelerate allowing the Fed to cut interest rates next year.

There are few potential U.S. market moving events this week, besides Tuesday’s day early release of the minutes from the Federal Open Market Committee’s last meeting.

U.S. markets are closed Thursday for Thanksgiving and Friday stocks and bonds will trade abbreviated sessions. Exchanges will also be closed in Japan on Thursday.

Later in the week the Reserve Bank of Australia releases minutes of its Nov. 7 policy meeting and Bank Indonesia is expected to keep its key interest rate on hold at 6.00%. Japan releases consumer price data on Friday, arguably the data highlight for the week.

Here are key developments that could provide more direction to markets on Tuesday:

– FOMC Minutes

– Chinese Q3 earnings: Baidu (NASDAQ:).com, iQiyi, Kingsoft Cloud, Kuaishou Technology, Tongcheng Travel Holdings