(Bloomberg) — Asian equities rose after the S&P 500 Index climbed to a record Friday, bolstered by speculation the Federal Reserve will start cutting interest rates this year.
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Shares jumped in Japan at the open and gained in South Korea, while futures pointed to an advance in Hong Kong. US contracts edged higher.
Another rally in the S&P 500’s most-influential group — technology — drove the gauge to a fresh high on Friday for the first time in two years. The benchmark topped 4,800 — defying warnings that the rally remains concentrated in a relatively narrow group of shares.
The Nikkei 225 Index has risen more than 8% this year, leading gains in major developed markets. The Bank of Japan starts a two-day policy meeting on Monday, and it is overwhelmingly expected to leave its settings unchanged on Tuesday when it announces the results of its gathering.
“While the US S&P 500 and Nasdaq 100 set new record highs ahead of the weekend, it is Japan’s stock market that is off to a dramatic start of the year,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “Although the market anticipates the beginning of an aggressive easing cycle by several central banks, and an exit of the BOJ’s negative-interest-rate policy, the start is not expected until later in the first half.”
The dollar was little changed against its major peers, holding gains made this month amid speculation the Fed’s policies will engineer a soft landing for the US economy.
Treasury 10-year futures ticked higher in Asia. That was after the 10-year yield declined Friday for the first time in a week as a “Fed-friendly” survey from the University of Michigan showed a mix of high consumer confidence and lower inflation expectations.
Among investors’ focus in Asia Monday is loan prime rates by Chinese commercial banks. The rates are expected to stay at current levels after the People’s Bank of China kept its key policy rate steady.
Meltup Phase
An exuberant meltup phase in US stocks might already be underway and might become irrational, according to Ed Yardeni. “Unless Fed Chair Powell stresses that he’s in no rush to ease, a speculative bubble could inflate, funded by money moving from interest-paying vehicles into stocks and bonds,” he wrote in a note.
Investors will also be looking to Thursday’s first estimate of US fourth-quarter GDP, central bank meetings for Canada and Europe, along with South Korean economic output data and European initial readings of purchasing managers’ surveys of 2024.
Oil edged lower as OPEC member Libya restarted production from its largest field, bolstering global supplies and outweighing concerns about tensions in the Red Sea that look set to continue disrupting shipping.
Ron DeSantis dropped out of the the US presidential race to endorse Republican front-runner Donald Trump ahead of the New Hampshire primary on Tuesday.
Key events this week:
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China loan prime rates, Monday
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US Conference Board leading index, Monday
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Bank of Japan rate decision, Tuesday
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Eurozone consumer confidence, Tuesday
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Netflix Inc. to report earnings; the streaming service is set to post a strong finish to 2023, Tuesday
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Japan trade, Wednesday
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Eurozone S&P Global Services & Manufacturing PMI, Wednesday
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UK S&P Global / CIPS Manufacturing PMI, Wednesday
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US S&P Global Services & Manufacturing PMI, Wednesday
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Tesla Inc., International Business Machines Corp. (IBM) to report earnings, Wednesday
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European Central Bank rate decision, Thursday
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Germany IFO business climate, Thursday
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US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday
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LVMH, Northrop Grumman Corp., SK Hynix Inc. to report earnings, Thursday
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Japan Tokyo CPI, Friday
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Bank of Japan issues minutes of policy meeting, Friday
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US personal income & spending, Friday
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The start of Lunar New Year celebrations in China, Friday
Stocks
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S&P 500 futures rose 0.1% as of 9:10 a.m. Tokyo time. The S&P 500 rose 1.2% on Friday
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Nasdaq 100 futures rose 0.3%. The Nasdaq 100 rose 2%
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Japan’s Topix index rose 0.8%
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Australia’s S&P/ASX 200 Index rose 0.6%
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Hong Kong’s Hang Seng futures rose 1.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0896
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The Japanese yen was little changed at 148.04 per dollar
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The offshore yuan was little changed at 7.2027 per dollar
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The Australian dollar was unchanged at $0.6597
Cryptocurrencies
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Bitcoin fell 0.4% to $41,593
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Ether fell 0.6% to $2,456.93
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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