Asian stocks and currencies climbed as calm returned after political upheaval, with traders shifting their focus to forthcoming tech earnings.
The MSCI Asia Pacific Index reversed a three-day drop, boosted by a rally in Taiwanese stocks. The S&P 500 gained 1.1% ahead of earnings from Tesla Inc. and Alphabet Inc., which are due later Tuesday. Asian currencies rallied against a weaker dollar.
Markets are taking a breather after sky-high valuations and sectoral rotation triggered a massive tech selloff over the last few sessions. While the US election continues to dominate headlines Kamala Harris now has more than enough pledged delegates to secure the Democratic presidential nomination, providing clarity on that front.
“Risk sentiments and Democrat support for Kamala Harris appear to be (at least on their way to) solid,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “What remains to be seen is whether a bull rotation will see gains cascading down from the ‘Magnificent 7,’ more broadly into smaller cap.”
Asian Stock Market failed to Change moves
Hong Kong and mainland Chinese markets fell following widespread dissatisfaction during the Third Plenum, with a surprise rate decrease on Monday failing to change the mood.
The yen has gained ahead of the Bank of Japan’s policy meeting next week. According to persons acquainted with the subject, some BOJ officials are willing to raise interest rates at the July meeting, but others believe sluggish consumer spending complicates their choice.
For the second consecutive session, a Bloomberg dollar index fell. Treasury rates dipped lower ahead of this week’s economic data and the Federal Reserve’s favored inflation indicator. For much of July, bets for a September rate cut drove shorter-term bonds higher, closing the gap with longer-dated maturities.
In the corporate sector, shares of Kako Corp. fell after South Korean authorities detained its founder Brian Kim on suspicions of market manipulation, making the internet entrepreneur the country’s most prominent business figure in years to be jailed.
Elsewhere in Asia, India’s Finance Minister Nirmala Sitharaman will introduce the budget on Tuesday, outlining the economic priorities of Prime Minister Narendra Modi’s new coalition.
Earnings Await
SK Hynix Inc., Contemporary Amperex Technology Co., and Keyence Corp. are among the companies reporting earnings in the region this week.
Almost two-thirds of respondents to Bloomberg’s Markets Live Pulse survey believe earnings will boost the US benchmark. The “Magnificent Seven” index rose more than 2% on Monday, powered by increases in Tesla and Nvidia Corp.
After leading the surge in US stocks for the majority of the year, big tech hit a wall last week. Investors shifted from high-flying megacap stocks to riskier, lagging sectors of the market, fueled by expectations on Fed rate cuts and the fear of more trade restrictions on chipmakers.
In commodities, oil remained near a six-week low as traders awaited further information on market balances, notably the outlook for US stocks.
Key events this week:
- Eurozone consumer confidence, Tuesday
- US existing home sales, Tuesday
- Alphabet, Tesla, LVMH earnings, Tuesday
- Canada rate decision, Wednesday
- US new home sales, S&P Global PMI, Wednesday
- IBM, Deutsche Bank earnings, Wednesday
- Germany IFO business climate, Thursday
- US GDP, initial jobless claims, durable goods, Thursday
- US personal income, PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 11:37 a.m. Tokyo time
- Nikkei 225 futures (OSE) rose 0.4%
- Japan’s Topix rose 0.5%
- Australia’s S&P/ASX 200 rose 0.7%
- Hong Kong’s Hang Seng was little changed
- The Shanghai Composite fell 0.5%
- Euro Stoxx 50 futures rose 0.3%
- Nasdaq 100 futures fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0892
- The Japanese yen rose 0.2% to 156.65 per dollar
- The offshore yuan was little changed at 7.2901 per dollar
- The Australian dollar fell 0.1% to $0.6636
Cryptocurrencies
- Bitcoin fell 0.8% to $67,600.71
- Ether fell 0.2% to $3,482.17
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.24%
- Japan’s 10-year yield was little changed at 1.065%
- Australia’s 10-year yield advanced two basis points to 4.33%
Commodities
- West Texas Intermediate crude rose 0.2% to $78.53 a barrel
- Spot gold rose 0.2% to $2,401.46 an ounce
Read more
Analyzing the Implications of the Stock Market Rotation Trend
EPR Properties Declares Monthly Dividend $0.285 for Common Shareholders
