Stocks in Asia Rise as Tech Giants’ Earnings Test Equities Bull Run
Asian Stocks on the Rise
Stocks in Asia continued their upward trend, following a rally in US tech heavyweights, whose earnings are seen as a significant test for the equities bull run on Wall Street. The MSCI Asia Pacific Index climbed for a third consecutive day, with gains observed in Hong Kong, Japan, and South Korea. The region’s chip-related stocks mirrored the strength of their American counterparts. Futures in the US also experienced an increase during early Asian trading. The steady performance of the dollar and Treasuries contributed to the favorable market outlook.
US Interest Rate Cut Forecasts Remain Alive
Aside from the strong performance of US tech giants, the weaker measures of business activity in the largest economy in the world have kept forecasts for US interest rate cuts alive. The recent slide on Wall Street, making stocks more attractive by removing market froth, has resulted in increased investor focus on earnings. Analysts from Citigroup Inc. believe the recent Wall Street bounce ahead of Big Tech earnings will positively impact Asian equity markets. Despite this, market experts hesitate to term it a complete “risk-on rally” at this point.
According to Matt Simpson, a senior market strategist at City Index Inc., “We’ve seen a nice bounce on Wall Street ahead of Big tech earnings, and that should filter through to Asian equity markets today… although there is some relief that the ECB and BOE seem happy to ‘decouple’ from the Fed.”
US Tech Giants’ Earnings in Focus
The S&P 500 achieved its best consecutive rally in two months, with chipmaker Nvidia Corp. leading the surge in the tech sector. Texas Instruments Inc. added to the positive tech momentum with a bullish revenue forecast, favorably impacting the chip industry and potentially benefiting Asian producers. This week, the earnings reports of several tech giants, including Meta Platforms Inc. and Alphabet Inc., will be closely watched. With the predictions of a 40% rise in profits for the “Magnificent Seven” group of tech megacaps in the first quarter of this year, their performance significantly affects the overall S&P 500.
These technology companies, which also include Apple Inc., Amazon.com Inc., and Nvidia Corp., carry a considerable weight in the benchmark index. Despite recent market fluctuations, the “Magnificent Seven” still maintain a combined valuation of 31 times forward earnings, highlighting their significance and the market’s focus on their performance.
Other Key Events and Market Movements
Forming an outline of the crucial events this week:
- Indonesia rate decision on Wednesday.
- IBM, Boeing, and Meta Platforms earnings on Wednesday.
- Malaysia Consumer Price Index on Thursday.
- South Korea Gross Domestic Product on Thursday.
- Turkey rate decision on Thursday.
- US Gross Domestic Product, wholesale inventories, initial jobless claims on Thursday.
- Microsoft, Alphabet, Airbus, and Caterpillar earnings on Thursday.
- Japan rate decision, Tokyo Consumer Price Index, and inflation and GDP forecasts on Friday.
- US personal income and spending, University of Michigan consumer sentiment on Friday.
- Exxon Mobil and Chevron earnings on Friday.
Market Movements:
Stocks:
- S&P 500 futures rose 0.2% as of 10:45 a.m. Tokyo time.
- Nikkei 225 futures (OSE) rose 1.9%.
- Japan’s Topix rose 1.1%.
- Australia’s S&P/ASX 200 remained mostly unchanged.
- Hong Kong’s Hang Seng rose 1%.
- The Shanghai Composite rose 0.2%.
- Euro Stoxx 50 futures rose 0.3%.
- Nasdaq 100 futures rose 0.6%.
Currencies:
- The Bloomberg Dollar Spot Index remained mostly unchanged.
- The euro remained mostly unchanged at $1.0709.
- The Japanese yen remained mostly unchanged at 154.81 per dollar.
- The offshore yuan remained mostly unchanged at 7.2583 per dollar.
- The Australian dollar rose 0.5% to $0.6518.
Cryptocurrencies:
- Bitcoin rose 0.7% to $66,844.45.
- Ether rose 1.1% to $3,244.55.
Bonds:
- The yield on 10-year Treasuries advanced one basis point to 4.61%.
- Japan’s 10-year yield remained mostly unchanged at 0.880%.
- Australia’s 10-year yield advanced 11 basis points to 4.38%.
Commodities:
- West Texas Intermediate crude oil remained mostly unchanged.
- Spot gold fell 0.1% to $2,319.59 an ounce.
This article has been produced with the assistance of Bloomberg Automation.
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