Stocks in Asia were set to rise after a rally on Wall Street pushed US tech shares into a bull market amid bets that a peak in interest rates is near and bank turmoil will continue to ease.
(Bloomberg) — Stocks in Asia were set to rise after a rally on Wall Street pushed US tech shares into a bull market amid bets that a peak in interest rates is near and bank turmoil will continue to ease.
Australian equities advanced along with Hong Kong futures, while Japan’s market opened softer. Contracts for US stocks inched lower in early Asia trading following a gain of 1.4% for the S&P 500 and a 1.9% jump in the Nasdaq 100, which cemented its 20% rebound from a low in December.
The tech-heavy index, which includes Apple Inc., Microsoft Corp., and Amazon.com, closed at the highest level since August in a sign investors are preparing for the Federal Reserve to end its interest rate hiking cycle and potentially pivot to looser policy later this year.
The gradual moves higher in stocks dragged the Cboe Volatility index to the lowest in three weeks.
Treasuries were flat across the curve Wednesday with the 10-year benchmark moving by the smallest margin in more than a month, underscoring the calm. There was little change in Treasuries as the Asia session got underway. Australian and New Zealand government bond yields were moderately higher.
The dollar was little changed in Asia on Thursday after strengthening as investors digested the latest remarks by Fed officials and looked ahead to core PCE data for clues on how the Fed’s next move. Investors now expect US rates to sit around 4.3% by the end of the year, around 70 basis points lower than the current level.
“The Fed remains in a very difficult position,” wrote Chris Senyek of Wolfe Research in a note. “With banks stabilizing, inflation still way above target, the labor market still historically strong, and the Fed desperately needing to rebuild credibility, our sense is that the FOMC will hike by 25 basis points on May 3.”
A busy day of Chinese earnings includes Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd., Bank of China Ltd., Bank of Communications Co., Air China Ltd., Country Garden Holdings, Citic Securities Co. and Great Wall Motor Co.
An Alibaba Group Holding Ltd. conference call Thursday morning will also provide investors with more detail on a plan unveiled this week to split the company into six components, which triggered a rally in its stock.
US banks were again in the spotlight after a report the Federal Deposit Insurance Corp. was mulling a squeeze on big lenders to help cover the almost $23 billion in costs from the recent spate of bank failures.
Elsewhere in markets, gold fell, Bitcoin hovered above $28,300, and oil was steady Thursday.
Key events this week:
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin speaks at event. Treasury Secretary Janet Yellen also speaks, Thursday
- China PMI, Friday
- Eurozone CPI, unemployment, Friday
- US consumer income, PCE deflator, University of Michigan consumer sentiment, Friday
- ECB President Christine Lagarde speaks, Friday
- New York Fed President John Williams speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 9:02 a.m. Tokyo time. The S&P 500 rose 1.4%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 1.9%
- Hang Seng futures rose 0.4%
- Japan’s Topix fell 0.6%
- Australia’s S&P/ASX 200 rose 0.9%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0842
- The Japanese yen rose 0.2% to 132.56 per dollar
- The offshore yuan was little changed at 6.8927 per dollar
Cryptocurrencies
- Bitcoin fell 0.1% to $28,363.85
- Ether fell 0.6% to $1,793.5
Bonds
- The yield on 10-year Treasuries was little changed at 3.57%
- Australia’s 10-year yield advanced four basis points to 3.32%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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