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Stocks in Asia Rise After US Tech Rally

(Bloomberg) — Stocks in Asia advanced after a US rally in tech heavyweights, whose high-stakes earnings are considered by Wall Street investors a major test of the equities bull run.

The MSCI Asia Pacific Index rose for a third day, with gains from Hong Kong to Japan and South Korea. The region’s chip-related stocks tracked the strength in their American peers. US futures increased in early Asian trading.

The dollar and Treasuries were steady. The yen remained a whisker away from the key 155 level to the dollar, with a former top Japanese foreign exchange official warning the country is on the brink of currency intervention.

In addition to the strong performance of the US tech giants, weakness in measures of business activity in the world’s largest economy also helped keep alive forecasts for US interest rate cuts this year. A slide on Wall Street in the past few weeks had made stocks more attractive as it removed market froth, with investors now focused on earnings, according to Citigroup Inc. strategists.

“We’ve seen a nice bounce on Wall Street ahead of Big tech earnings, and that should filter through to Asian equity markets today,” said Matt Simpson, a senior market strategist at City Index Inc. “I’d stop short of calling it a risk-on rally at this stage, although there is some relief that the ECB and BOE seem happy to ‘decouple’ from the Fed.”

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The S&P 500’s Back-to-Back Rally

The S&P 500 notched its best back-to-back rally in two months. Nvidia Corp., the poster child of the artificial-intelligence boom, led a surge in chipmakers. Texas Instruments Inc. gave a bullish revenue forecast — a good sign for the chip industry that may help lift Asian producers on Wednesday.

Oil held a gain as an industry report showed shrinking US crude stockpiles and traders tracked progress toward fresh sanctions against Iran. Gold edged lower.

Elsewhere, Australia’s inflation came in faster than expected in the first three months of 2024, suggesting price pressures are proving sticky and reinforcing the case for the Reserve Bank to hold interest rates at a 12-year high next month.

In the corporate world, Silchester International Investors, a London-based firm that has advocated for corporate change in Japan, disclosed it has taken a stake in Nikon Corp., pushing the shares up by the most in almost three years.

Earnings Watch

In late US hours, Tesla Inc. soared as the electric-vehicle giant struck an upbeat tone despite a sales miss, the first of the “Magnificent Seven” megacaps to report. The stock halted a seven-day plunge, climbing alongside other members of the group.

Morgan Stanley’s Mike Wilson said the bar is high for US firms to deliver on earnings, particularly for megacap technology names, which face tough comparisons from the growth they showed last year.

Besides Tesla, Microsoft Corp., Meta Platforms Inc. and Alphabet Inc. are also due to report earnings this week. Profits for the “Magnificent Seven” group — which also includes Apple Inc., Amazon.com Inc. and Nvidia Corp. — are forecast to rise about 40% in the first quarter from a year ago, according to Bloomberg Intelligence data.

The group of tech megacaps is crucial to the S&P 500 since the companies carry the heaviest weightings in the benchmark. After this year’s advance, valuations have gotten lofty. After the latest selloff, the Magnificent Seven still traded at a combined 31 times forward earnings, according to data compiled by Bloomberg.

Key Events This Week:

Indonesia rate decision, Wednesday

IBM, Boeing, Meta Platforms earnings, Wednesday

Malaysia CPI, Thursday

South Korea GDP, Thursday

Turkey rate decision, Thursday

US GDP, wholesale inventories, initial jobless claims, Thursday

Microsoft, Alphabet, Airbus, Caterpillar earnings, Thursday

Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday

US personal income and spending, University of Michigan consumer sentiment, Friday

Exxon Mobil, Chevron earnings, Friday

Some of the main moves in markets:

Market Updates

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 was little changed
• 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 was little changed
• The euro was little changed at $1.0709
• The Japanese yen was little changed at 154.81 per dollar
• The offshore yuan was little changed 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 was little changed at 0.880%
• Australia’s 10-year yield advanced 11 basis points to 4.38%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold fell 0.1% to $2,319.59 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rita Nazareth and Rob Verdonck.

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©2024 Bloomberg L.P.

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