Equities in Asia Rise on Tech Rally in US, Strong Earnings Outlook
Equities in Asia saw gains on Friday following a rally in the world’s largest technology companies that drove a rebound in US stocks. Japanese stocks rose, Australian shares were steady, and Hong Kong equity futures fell. US contracts remained steady after the S&P 500 climbed on Thursday, with the tech-heavy Nasdaq 100 closing over 1.5% higher.
A solid economy is expected to fuel a rise in profit growth for US companies, with strong margins from big tech expected to be a key driver. Treasuries gained slightly in Asia after selling on Thursday pushed 10-year yields four basis points higher. US producer prices increased in March by the most in 11 months, while Australian and New Zealand bonds faced selling pressure.
George Ball, chairman of Sanders Morris, noted, “It’s not going to be Federal Reserve rate cuts that drive the market going forward, rather it’s going to be earnings. Corporate earnings are much stronger than people have anticipated even in this elevated interest-rate environment.”
In Asia, the yen was steady after weakening on Thursday. Japanese authorities warned that they will consider all options to combat yen weakness after it slumped to its weakest level against the dollar since 1990. Finance Minister Shunichi Suzuki emphasized that officials are watching currencies with a high sense of urgency.
Investors will also be closely monitoring the offshore yuan after it advanced against the greenback for a fourth time in five trading sessions, following support from the People’s Bank of China on Thursday.
While the latest Producer Price Index (PPI) reading was constructive, investors should be prepared for fewer rate cuts this year, according to Larry Tentarelli at Blue Chip Daily Trend Report. Earnings season in the US kicks into full swing on Friday with a handful of US banks reporting.
Elsewhere in Asia, data set for release includes industrial production in Japan, inflation in India, and trade figures for China. The central bank of South Korea is due to deliver its monetary policy decision. In commodities, gold steadied after climbing to a fresh record on the US inflation report, while oil edged higher after a decline in the previous session.
Key events this week include China trade data, US University of Michigan consumer sentiment, and earnings reports from Citigroup, JPMorgan, and Wells Fargo. San Francisco Fed President Mary Daly is also scheduled to speak.
Stocks:
– S&P 500 futures were little changed
– Hang Seng futures fell 0.6%
– Japan’s Topix rose 0.2%
– Australia’s S&P/ASX 200 fell 0.5%
– Euro Stoxx 50 futures fell 0.7%
Currencies:
– The Bloomberg Dollar Spot Index was little changed
– The euro was little changed at $1.0727
– The Japanese yen was little changed at 153.14 per dollar
– The offshore yuan was little changed at 7.2556 per dollar
– The Australian dollar was unchanged at $0.6538
Cryptocurrencies:
– Bitcoin fell 0.3% to $70,296.76
– Ether fell 0.3% to $3,512.32
Bonds:
– The yield on 10-year Treasuries declined two basis points to 4.57%
– Japan’s 10-year yield declined one basis point to 0.850%
– Australia’s 10-year yield advanced three basis points to 4.29%
Commodities:
– West Texas Intermediate crude rose 0.6% to $85.56 a barrel
– Spot gold rose 0.2% to $2,376.40 an ounce
Overall, the positive momentum in tech stocks and strong earnings outlook are driving market optimism in Asia, despite some concerns about currency weakness and potential rate cuts. Investors will be closely watching upcoming data releases and central bank decisions for further market direction.
