Asia Stocks Rise on Optimism Over Tech Profits
Asia stocks surged on Tuesday, led by Hong Kong, as global markets rebounded from a significant selloff and investors grew optimistic about the upcoming profits announcements from major tech leaders. Wall Street regained its footing and recovered from a $2 trillion slump, prompting a positive outlook for the Asian markets.
Technology Sector Propels Hong Kong Stocks Higher
Technology firms were the driving force behind the gains in Hong Kong, with shares receiving an upgrade from UBS Group AG. Despite concerns surrounding China’s property and macroeconomic issues, UBS remains bullish on the tech sector’s resilient earnings. The upgraded shares in China, marked as overweight by UBS, further boosted Hong Kong’s indexes.
Dong Chen, the chief Asia strategist at Banque Pictet, emphasized that Asia is expected to witness robust earnings growth compared to other markets. Chen expressed confidence in leading Asian companies, mentioning India, South Korea, Taiwan, and China as potential growth leaders in the region.
Anticipation for Earnings Results and AI Focus
Investors are eagerly awaiting the earnings reports of around 180 companies, accounting for over 40% of the S&P 500’s market value. The lofty expectations for artificial intelligence (AI) have heightened the focus on earnings this week. These reports will be essential in providing insights into the financial performance of AI-based companies.
As the earnings season begins, market sentiment is recovering from recent geopolitical concerns and the Federal Reserve’s stance on interest rates. Optimism surrounding Apple Inc.’s upcoming results fueled a positive outlook, as Bank of America Corp. declared it a top pick for the year 2024.
Bond Auctions and Currency Movements
Treasuries remained relatively stable as investors prepare for a series of bond auctions. The auctions come as bond yields hit their highest point in 2024. In other currency news, the dollar’s recent surge paused, bringing relief to the Asian markets. Emerging market currencies, in particular, experienced an uptick in value after reaching a 2024 low in the previous week.
Further Market Developments
The Bank of Japan is expected to maintain its benchmark interest rates, potentially hinting at a less dovish stance as the yen hovers at a 34-year low. Attention in Asia also shifts to China’s role as a significant lender to developing nations amidst discussions on burden-sharing in debt restructurings.
In corporate news, the trading debut of Chinese bubble-tea maker Sichuan Baicha Baidao Industrial Co. and Tianjin Construction’s Hong Kong market entry took center stage with notable stock fluctuations.
Gold’s Decline and Oil Market Analysis
Gold experienced extended losses following its most significant daily decline in nearly two years. Improved Middle East tension and indications of the Federal Reserve keeping interest rates higher for a longer duration were cited for the decline in gold’s demand. Conversely, oil prices inched higher as traders analyzed the next steps between Israel and Iran following signs of easing hostilities.
Market Expectations and Key Events
The expectation for a boost in US equity benchmarks from robust earnings reached its highest level, as indicated by respondents in Bloomberg’s Markets Live Pulse survey. Notably, nearly two-thirds of the participants said they anticipate earnings to have a positive impact.
Key events this week include earnings reports from Microsoft Corp., Alphabet Inc., Meta Platforms Inc., and Tesla Inc., collectively known as the “Magnificent Seven” megacaps. Bloomberg Intelligence predicts a significant rise in profits, estimating a 40% YoY increase for these tech giants. With AI technologies playing a crucial role, the earnings contributions of these companies will be closely scrutinized.
Other events to watch include economic data releases, the Bank of England Chief Economist Huw Pill’s speech, key earnings announcements, rate decisions, and inflation forecasts.
Market Movement Snapshot
Stocks:
- S&P 500 futures were little changed.
- Nasdaq 100 futures fell 0.1%.
- Japan’s Topix rose 0.2%.
- Australia’s S&P/ASX 200 rose 0.4%.
- Hong Kong’s Hang Seng rose 1.6%.
- The Shanghai Composite fell 0.4%.
- Euro Stoxx 50 futures rose 0.5%.
Currencies:
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0656
- The Japanese yen was little changed at 154.73 per dollar
- The offshore yuan was little changed at 7.2532 per dollar
Cryptocurrencies:
- Bitcoin was little changed at $66,532.2
- Ether fell 0.2% to $3,186.46
Commodities:
- West Texas Intermediate crude rose 0.4% to $82.24 a barrel
- Spot gold fell 1% to $2,303.82 an ounce
This story has been produced with the assistance of Bloomberg Automation.
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