(Bloomberg) — Asian stocks advanced as attention shifted from tensions in the Middle East to corporate earnings and economic data for insight into the central bank’s policy direction.
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Hong Kong stocks outperformed, with the benchmark index gaining more than 2%. Indicators across the region recovered some of last week’s decline, with traders reassured by the absence of further escalation by Iran following Israel’s retaliation.
Mainland Chinese stocks opened mixed as the country’s lenders kept prime loan rates steady. Most Asian chip stocks slumped after Nvidia fell 10%, the biggest in four years. U.S. stock contracts edged higher after the Nasdaq 100 index ended Friday with a 2.1% loss.
The dollar weakened and the yield on 10-year US Treasuries rose as demand for safe haven assets slowed slightly. Investors around the world are recalibrating their positions after stronger-than-expected U.S. data forced the Federal Reserve to reset its first interest rate cut.
“We are seeing a surge of relief this morning as geopolitical risks ease,” said Kyle Rodda, senior market analyst at Capital.com in Melbourne. “This decision now helps turn the situation around and allows markets to once again focus on macroeconomic and business fundamentals.”
U.S. growth and the Fed’s preferred measure of inflation will be due this week, allowing precise betting on the timing of any rate cut. Investors are also having to absorb a large series of Treasury auctions.
Read more: Fed resets cut clock, questions whether rates are high enough
The S&P 500 experienced its worst week since March 2023 last week, extending the decline from its all-time high to more than 5%. After the indicator’s best start to the year since 2019, investors are increasingly skeptical about where the market may move in the near term, even taking into account the continued strength of the economy.
More than half of the “Magnificent Seven” tech mega-caps will report earnings this week, leaving investors wondering whether these companies will live up to the high expectations set for artificial intelligence.
Profits for the seven largest growth companies in the S&P 500 – Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia, Meta Platforms Inc. and Tesla Inc. – are on track to increase by 38 % during the year. first quarter, according to Bloomberg Intelligence. Excluding them, the rest of the benchmark’s profits are expected to decline by 3.9%.
Meanwhile, the limited Israeli strike against Iran and the Iranian leadership’s muted response potentially offer an opportunity to reduce the conflict between the long-standing adversaries, for now, according to RBC Capital Markets.
“This is far from an easy truce and could be tested once again as the broader context in the Middle East remains tense, even if the worst outcome does not occur,” Helima wrote Croft, head of global commodities strategy at RBC, in a note. to customers. “The last two weeks have shown that this war can take a sudden turn and that opposing sides may not fully understand each other’s red lines, thereby risking creating a fog of war dynamics. »
Oil fell after its first consecutive weekly decline this year, as traders weighed potential next moves from Iran and Israel. Gold slipped.
Elsewhere this week, inflation figures from Australia and Malaysia are due. Bank Indonesia will make a policy decision just as the currency is under pressure, while results from Caterpillar, a gauge of global growth, are awaited.
Key events this week:
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Euro zone consumer confidence, Monday
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Philippine and US military forces begin their annual war exercises near Taiwan and the South China Sea on Monday.
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ECB President Christine Lagarde speaks on Monday
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Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Tuesday
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UK S&P Global, CIPS Manufacturing PMI, Tuesday
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Australian CPI, Wednesday
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Indonesia rate decision on Wednesday
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Results from IBM, Boeing and Meta Platforms, Wednesday
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Malaysia CPI, Thursday
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South Korea’s GDP on Thursday
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Turkey rate decision on Thursday
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US GDP, wholesale stocks, initial jobless claims, Thursday
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Results from Microsoft, Alphabet, Airbus, Caterpillar, Thursday
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Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday
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Personal income and spending in the United States, consumer sentiment from the University of Michigan, Friday
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Exxon Mobil, Chevron results, Friday
Some of the main market movements:
Actions
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S&P 500 futures rose 0.2%, ending a six-day losing streak as of 10:42 a.m. Tokyo time.
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Nikkei 225 (OSE) futures rose 0.5%
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Japan’s Topix rose 1.2%, more than any closing gain since March 21.
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Australia’s S&P/ASX 200 index rose 1%, more than any closing gain since March 28.
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Hong Kong’s Hang Seng rose 1.2%, more than any closing gain since April 10.
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The Shanghai Composite index fell 0.2%
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Euro Stoxx 50 futures rose 0.2%
Currencies
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Bloomberg Dollar Spot Index little changed
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The euro was little changed at $1.0665
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The Japanese yen remained unchanged at 154.64 per dollar
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