Asian Stocks Edge Higher as Tech Lifts US Equities: Markets Wrap

Japanese stocks rose while Australian shares were little changed and Hong Kong equity futures fell. US contracts were steady after the S&P 500 climbed Thursday while the tech-heavy Nasdaq 100 closed over 1.5% higher. A solid economy is expected to fuel a rise in profit growth for US companies — and strong margins from big tech will 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 from a year earlier by the most in 11 months. Australian and New Zealand bonds faced selling pressure early Friday.

“It’s not going to be Federal Reserve rate cuts that drive the market going forward, rather it’s going to be earnings,” said George Ball, chairman of Sanders Morris. “Corporate earnings are much stronger than people have anticipated even in this elevated interest-rate environment.”

In Asia, the yen was steady after further weakness Thursday. Traders will be monitoring the currency once more as Japanese authorities warned that it will consider all options to combat weakness in the yen after it slumped to its weakest level against the dollar since 1990.

“Whether this involves currency intervention or not, we authorities are prepared for all situations all the time,” Masato Kanda, Japan’s top currency official, told reporters Thursday morning. Finance Minister Shunichi Suzuki later echoed that warning, telling reporters officials are watching currencies “with a high sense of urgency.”

Investors will also be closely watching the offshore yuan after it advanced against the greenback for a fourth time in five trading sessions. The strengthening follows support from the People’s Bank of China on Thursday.

Fewer Rate Cuts

While the latest PPI reading was constructive, investors should be prepared for fewer rate cuts this year — one or two — and for a first potential move not until the July meeting, according to Larry Tentarelli at Blue Chip Daily Trend Report.

“Although we understand the relief with which this report will be received, there is nothing very encouraging contained within it — and the best that can be said is that there was ‘no new bad news’ either,” said Michael Shaoul at Marketfield Asset Management.

Fed Bank of New York President John Williams said the central bank has made “tremendous progress” toward better balance on its inflation and employment goals, but added there’s no need to cut in the “very near term.” His Richmond counterpart Thomas Barkin said the US central bank still has work to do to contain price pressures and can take its time before cutting interest rates.

Earnings season in the US kicks into full swing Friday with a handful of US banks reporting. Wall Street projects S&P 500 members will show 3.8% annual growth in earnings per share for the first-quarter reporting period, data compiled by Bloomberg Intelligence show. Profits for the “Magnificent Seven” cohort — Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia Corp., Meta Platforms Inc. and Tesla Inc. — are on course to rise 38% in the first quarter, according to BI.

Elsewhere in Asia, data set for release in the region 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. Markets are closed in Indonesia, Thailand and Dubai.

In commodities, gold steadied in early Asian trading after climbing to a fresh record Thursday on the US inflation report. Meanwhile, oil edged higher Friday after a decline in the previous session as a swelling of US stockpiles overshadowed the possibility of an attack on Israel by Iran or its proxies. 

Key events this week:

Some of the main moves in markets:

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

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Published: 12 Apr 2024, 06:11 AM IST