Asian Equities Tick Higher on Heels of US Rally: Markets Wrap

Asian equities opened marginally higher Tuesday with support from a rally on Wall Street amid optimism that the Federal Reserve will pause its most-aggressive tightening campaign in decades.

(Bloomberg) — Asian equities opened marginally higher Tuesday with support from a rally on Wall Street amid optimism that the Federal Reserve will pause its most-aggressive tightening campaign in decades.

Japan’s Topix rose for a third day as it extended gains that have taken the index to the highest level since 1990. South Korean shares also climbed while Australia’s benchmark edged lower and Hong Kong futures fell slightly.

Contracts for US benchmarks rose slightly in Asia after the Nasdaq 100 and the S&P 500 closed at the highest levels since April 2022. Gains in the Nasdaq, which rose 1.8% overnight, will put Asian tech stocks in the spotlight.

The two-year US Treasury yield, which is sensitive to imminent central bank moves, edged lower for a second day. The Bloomberg Dollar Spot Index was steady early Tuesday as major currencies traded in narrow ranges.

All eyes are on the Federal Open Market Committee, which is expected to keep interest rates in the 5%-5.25% range on Wednesday. This assumes consumer price index data later Tuesday shows subdued inflationary pressure. The likelihood of a hike is higher in July, with swaps showing an almost quarter-point of additional tightening priced in by next month’s meeting.

Yields of Australia’s policy-sensitive three-year government bonds rose slightly while rates on New Zealand’s two-year debt were down fractionally.

Sentiment toward Chinese assets remains weak. Goldman Sachs Group Inc. analysts said the nation’s struggling real estate industry is expected to see an L-shaped recovery in the coming years. They also downgraded earnings estimates and price targets on some Chinese property stocks.

Goldman also cut its oil forecast for the third time in six months, sending West Texas Intermediate more than 4% lower to its lowest close in three months. Even with Saudi Arabia’s decision less than two weeks ago to cut 1 million barrels a day of production, the bank sees crude supplies swelling, and trimmed its year-end price estimate to $86. WTI was fractionally higher Tuesday.

On Monday, Tesla Inc. climbed for a 12th straight session — a record winning run — and Apple Inc. hit an all-time high. KeyCorp and Citizens Financial Group Inc. led losses in banks after disappointing updates at an industry conference.

Oracle Corp. gained as its sales beat estimates, signaling the software maker’s cloud business is benefiting from demand for artificial intelligence workloads.

Meanwhile, Bitcoin held most of Monday’s loss as last week’s regulatory crackdown by the US Securities and Exchange Commission weighed on sentiment.

Key events this week:

US CPI, Tuesday.
Eurozone industrial production, Wednesday.
US PPI, Wednesday.
Federal Reserve rate decision, updated economic forecasts, Jerome Powell’s press conference, Wednesday.
IEA oil market report, Wednesday.
China property prices, retail sales, industrial production, Thursday.
China central bank meeting to decide on one-year policy loan rate, Thursday.
European Central Bank President Christine Lagarde holds press conference following the rate decision, Thursday.
US initial jobless claims, retail sales, empire manufacturing, business inventories, industrial production, Thursday.
Bank of Japan rate decision, Friday.
US University of Michigan consumer sentiment, Friday.

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 10:36 a.m. Tokyo time. The S&P 500 rose 0.9%
Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 1.8%
Hang Seng futures fell 0.2%
Japan’s Topix rose 0.7%
Australia’s S&P/ASX 200 fell 0.1%
Euro Stoxx 50 futures rose 0.5%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0764
The Japanese yen was little changed at 139.52 per dollar
The offshore yuan was little changed at 7.1568 per dollar
The Australian dollar was little changed at $0.6755

Cryptocurrencies

Bitcoin rose 0.2% to $25,946.46
Ether rose 0.2% to $1,742.63

Bonds

The yield on 10-year Treasuries was little changed at 3.73%
Japan’s 10-year yield fell half a basis point to 0.420%
Australia’s 10-year yield declined four basis points to 3.91%

Commodities

West Texas Intermediate crude rose 0.1% to $67.20 a barrel
Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rita Nazareth.

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