Stocks in Asia rose on optimism that ongoing diplomatic efforts may help prevent the Israel-Hamas war from expanding into a wider conflict.
(Bloomberg) — Stocks in Asia rose on optimism that ongoing diplomatic efforts may help prevent the Israel-Hamas war from expanding into a wider conflict.
An Asian equity gauge snapped a two-day decline while contracts for US equities slipped after both the S&P 500 and the Nasdaq 100 rose on Monday. Rio Tinto Plc climbed the most in a month following a report which showed the miner recorded a higher-than-expected increase in copper production for the third quarter.
Gold fell for a second day while a gauge of the dollar traded in a narrow range. Haven bids have eased as investors monitor ongoing efforts to defuse tensions in the Middle East.
US President Joe Biden is set to visit Israel as part of a push to prevent the war from spreading. Secretary of State Antony Blinken also returned to Israel to meet Prime Minister Benjamin Netanyahu, after talks with Arab governments. Russian President Vladimir Putin held a call with the leaders of Egypt, Syria, Iran and the Palestinian Authority, and the Kremlin said there was a “unanimous opinion” on the need for a cease-fire. He spoke separately with Netanyahu.
Treasury yields edged higher in the Asian morning session after those on the 10-year yield climbed nine basis points to 4.7% Monday.
The Middle East conflict “has added to the upside risks to oil prices and downside risks to shares in the near term,” Shane Oliver, the head of investment strategy at AMP, wrote in a note. Still, “if Iran stays out of the conflict and a major supply disruption is avoided, the impact on shares on a 12-month view should be minimal.”
Country Garden Holdings Co. is also on the radar as the clock is ticking for the distressed developer to pay interest on a dollar bond. The builder, which has become a symbol of China’s broader property debt crisis, must pay a $15.4 million coupon by the end of a 30-day grace period Oct. 17-18 before a default can be called. The company’s shares rose as much 4.1% on Tuesday.
Another key focus in Asia is China’s Belt and Road forum, which Russia’s Putin is expected to attend.
Eyes on Earnings
Aside from geopolitics, traders will also be focused on corporate results this week. The outlook for earnings is weakening and could remain subdued, according to strategists from Morgan Stanley to JPMorgan Chase & Co.
As the reporting season kicks off, Morgan Stanley’s Michael Wilson said earnings revisions breadth — referring to the number of stocks seeing upgrades versus downgrades — for the S&P 500 has fallen sharply over the past couple of weeks. Citigroup Inc.’s index of earnings revisions shows downgrades have outpaced upgrades for four straight weeks ahead of the reporting season. JPMorgan strategist Mislav Matejka expects this to continue.
Investors looking to earnings season for a dose of good news are hanging their hopes on a familiar group: Big Tech.
The five biggest companies in the S&P 500 — Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc. and Nvidia Corp. — account for about a quarter of the benchmark’s market capitalization. Their earnings are projected to jump 34% from a year earlier on average, according to analyst estimates compiled by Bloomberg Intelligence.
In economic news, a measure of New York state factory activity contracted in October, reflecting a pullback in demand. Federal Reserve Bank of Philadelphia President Patrick Harker repeated comments he made last week asserting the central bank can hold its benchmark rate steady as long as there is not a sharp turn in the economic data.
Elsewhere, Bitcoin edged lower after surging as much as 10% as BlackRock Inc. said its application for an exchange-traded fund that invests directly in the cryptocurrency is still under review.
Key events this week:
- Chinese President Xi Jinping hosts world leaders at the Belt and Road Initiative forum from Tuesday to Wednesday, with Russian President Vladimir Putin expected to attend
- Joint European Central Bank/IMF policy and research conference, Tuesday
- Germany ZEW survey expectations, Tuesday
- UK jobless claims, unemployment, Tuesday
- US retail sales, business inventories, industrial production, Tuesday
- Goldman Sachs, Bank of America earnings, Tuesday
- New York Fed President John Williams moderates discussion, while Richmond Fed President Tom Barkin speaks at a separate event, Tuesday
- Reserve Bank of Australia Governor Michele Bullock speaks, Wednesday
- China GDP, retail sales, industrial production, Wednesday
- UK CPI, Wednesday
- Eurozone CPI, Wednesday
- Morgan Stanley, Netflix, Tesla earnings, Wednesday
- Federal Reserve issues Beige Book economic survey, Wednesday
- Philadelphia Fed President Patrick Harker and New York Fed President John Williams speak at separate events, Wednesday
- Australia unemployment, Thursday
- Japan trade, Thursday
- China property prices, Thursday
- US initial jobless claims, existing home sales, leading index, Thursday
- Federal Reserve Chair Jerome Powell, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan speak at different events, Thursday
- Japan CPI, Friday
- China loan prime rates, Friday
- Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 11:50 a.m. Tokyo time. The S&P 500 rose 1.1%
- Nasdaq 100 futures were little changed. The Nasdaq 100 increased 1.2%
- Japan’s Topix index rose 0.5%
- Hong Kong’s Hang Seng Index rose 0.3%
- China’s Shanghai Composite Index fell 0.2%
- Australia’s S&P/ASX 200 Index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0549
- The Japanese yen was little changed at 149.54 per dollar
- The offshore yuan fell 0.1% to 7.3161 per dollar
- The Australian dollar was little changed at $0.6348
Cryptocurrencies
- Bitcoin was little changed at $28,404.11
- Ether rose 0.5% to $1,596.7
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.73%
- Japan’s 10-year yield advanced 1.5 basis points to 0.765%
- Australia’s 10-year yield advanced eight basis points to 4.54%
Commodities
- West Texas Intermediate crude fell 0.5% to $86.20 a barrel
- Spot gold fell 0.3% to $1,913.95 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Toby Alder and Abhishek Vishnoi.
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