Early morning call: Nikkei once again the outperformer in APAC

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Nikkei rally continues

APAC equity markets rose overnight in the wake of a positive US session. In Japan, the Nikkei 225 rally continues as investors reassess BOJ impending move after earthquake and weak wages data. Exporters also benefited from yen weakness. In Australia, trade surplus rose to an eight-month high in November. Trade surplus widened to $11.43 billion Australian dollars, from $7.7 billion Australian dollars the previous month, easily beating market expectations. An increase mainly due to a 7.9% drop in imports. Exports rose 1.7%.

US CPI data

At the end of last week, the US dollar was shaken by a stronger-than-expected job report. If the labour market is no longer as tight as it was earlier in the year, job growth remains solid, which led some economists to revise their Fed Funds Rates expectations for this year. The dollar will be tested once again this afternoon with the publication of the latest US inflation report. Headline CPI should come at 3.2% YoY, one notch higher than the previous month. Core CPI growth is also expected to decelerate, to 3.8% YoY, from 4%.

US inflation: more work needed

On Wednesday, NY Fed President Fed John Williams said it was still too soon to call for rate cuts, as the central bank still has some way to go to get inflation back to its 2% target. "I expect we will need to maintain a restrictive stance of policy for some time to fully achieve our goals, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis," says Williams.

Bitcoin ETFs approved

The SEC has finally given Bitcoin ETFs the green light. Yesterday, the US Securities regulator approved 11 applications, including those from BlackRock, Fidelity, Invesco and VanEck. Most of these products are expected to start trading today. What could it mean for Bitcoin trading? ETFs offer investors exposure to Bitcoin without directly holding it. Earlier this week, analysts at Standard Chartered estimated ETFs could draw $50 billion to $100 billion this year alone. As of Wednesday, Bitcoin market capitalisation stood at $913 billion.

Tesco and M&S perform well in retail

Elsewhere on the equity market, Tesco raised its profit outlook for the second time in four months after reporting better than expected sales for the Christmas period. Marks & Spencer food sales increased 10.5%, with LFL sales up 9.9%. M&S was the top performing grocer in volume growth terms over the Christmas period.