Asian Stocks Rise on Optimism Over Big Tech Earnings
Asian stocks saw a rise after US shares rebounded from a $2 trillion selloff, driven by optimism surrounding the upcoming earnings announcements of big tech leaders. Benchmark indexes in Japan and South Korea advanced, while futures in Hong Kong also pointed to gains. Contracts for US equities were relatively unchanged after the S&P 500 surpassed 5,000, halting a six-day decline. The Nasdaq 100 also rose, with Nvidia Corp. leading gains in the big tech sector. Apple Inc. was named a top pick for 2024 at Bank of America Corp. on the back of positive expectations for its upcoming results.
Investors are eagerly awaiting the earnings reports of about 180 companies in the S&P 500 this week, representing over 40% of the gauge’s market capitalization. The focus is particularly on the “Magnificent Seven” megacaps, with profits forecasted to increase by nearly 40% from a year ago. This comes after a period of market volatility fueled by geopolitical concerns and signals from the Federal Reserve regarding interest rates.
Chris Larkin from E*Trade at Morgan Stanley noted, “Concerns about rising interest rates, stubborn inflation, and geopolitical risks aren’t going anywhere — but this week, the tech sector may be ‘calling the shots’.”
Treasuries remained flat in Asia ahead of upcoming bond auctions, while Australian bonds saw gains in early trading. Oil prices held steady after tensions in the Middle East eased, and gold prices edged higher following a decline on Monday.
In Asia, attention has turned to China’s role as a major lender to developing nations, with reports indicating that the head of its central bank is pushing for creditors engaged in debt restructurings to agree on a fair burden-sharing mechanism.
The yen traded near a 34-year low against the dollar, sparking speculation that Japanese authorities may intervene to support the currency. Strategists at top Wall Street banks are divided on whether companies can meet robust earnings forecasts, with differing views on the impact of inflation, a stronger dollar, and geopolitical tensions.
Overall, market sentiment remains positive, with a majority of respondents in a Bloomberg survey expressing confidence that earnings will boost the US equity benchmark. However, the challenge for companies this earnings season will be to deliver results that support already high valuations.
Key events to watch this week include earnings reports from major tech companies like Microsoft Corp., Alphabet Inc., Meta Platforms Inc., and Tesla Inc., which are expected to shed light on the role of artificial intelligence in driving future profits.
In summary, the outlook for Asian stocks remains positive as investors look ahead to a busy week of earnings announcements and economic data releases.
