(Bloomberg) — Stocks in Asia were mixed after US benchmarks wiped out gains in the final half hour of trading, with investors tweaking portfolios after a rally that’s already topped $4 trillion this year.
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Shares fell at the open in Hong Kong and mainland China, while rising in Japan and Australia. The recent advance in China’s equity markets will likely be tested, as key financial institutions announce earnings, starting with Industrial & Commercial Bank of China Ltd. later Wednesday.
Alibaba Group Holding Ltd. declined in Hong Kong after the company called off a $1 billion-plus initial public offering for its Cainiao logistics arm. Chinese EV giant BYD Co. also fell after reporting 2023 profit that missed estimates.
Meanwhile, Apple Inc.’s iPhone shipments in China dropped about 33% in February from a year ago, according to official data, extending a slump in demand for the flagship device in its most important overseas market.
US stock futures pointed to gains after the S&P 500 declined for a third day. The US equity benchmark is on track to notch five straight months of gains, but now traders are debating whether the road gets rougher for the rally to keep chugging along as stock valuations remain elevated relative to history.
Japan’s Nikkei 225 is one of few Asian equity benchmarks that are able to match the pace of the US rally — advancing more than 20% this year and on track for one of its best quarters ever. Hong Kong has been unable to fully recover after plunging at the start of the year and is set for a slight decline in the three-month period ending March, while Sydney is set to post a modest gain.
Investors will have to assess many moving parts when looking at potential month-end flows, which includes a holiday shortened week this month, according to Tony Sycamore, a market analyst at IG Australia Pty.
“Typically, rebalancing involves selling the best-performing stock markets, which for March would be Korea, Germany, Japan, and the US, and buying the laggards,” he wrote in a note. “More broadly, this month should, in theory, see outflows from equities and into fixed income, which has underperformed relative to equities.”
Cocoa Surge
Treasuries steadied in Asian trading after rebounding from session lows on Tuesday following a $67 billion sale of five year-notes. The yen weakened to an intraday low as a hawkish Bank of Japan board member said financial conditions will stay accommodative.
The dollar was marginally stronger against its Group-of-10 peers, while the offshore yuan was little changed after the People’s Bank of China once again boosted support for the currency.
Profits at China’s industrial companies increased in the first two months of the year, extending a gaining streak since August and adding to positive signs in the economy.
Cocoa futures surged above an unprecedented $10,000 a metric ton on Tuesday before erasing gains and taking a breather from a historic rally that has seen prices of the key chocolate ingredient double this year.
Oil extended a modest decline after an industry report pointed to a sizable build in US inventories, and wider markets struck a weaker tone ahead of the end of the quarter. Gold fell, but traded close to its record.
As traders geared up for the Fed’s preferred inflation gauge on Friday — when markets will be closed — they parsed the latest economic readings. US consumer confidence held steady, durable goods orders climbed while home-price growth accelerated at the fastest rate since 2022.
For equities to warrant their gains in recent months, global central banks must ease monetary policy this year and companies have to deliver healthy earnings growth, according to JPMorgan Chase & Co.’s Marko Kolanovic.
Key events this week:
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Bank of England issues financial policy committee minutes, Wednesday
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Eurozone economic confidence, consumer confidence, Wednesday
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Fed Governor Christopher Waller speaks, Wednesday
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UK GDP revision, Thursday
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US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
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Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
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US personal income and spending, PCE deflator, Friday
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Good Friday. Exchanges closed in US and many other countries in observance of holiday. US federal government is open.
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San Francisco Fed President Mary Daly speaks, Friday
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Fed Chair Jerome Powell speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.2% as of 10:26 a.m. Tokyo time
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Nasdaq 100 futures rose 0.2%
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Japan’s Topix index rose 0.7%
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Hong Kong’s Hang Seng Index fell 0.5%
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China’s Shanghai Composite Index fell 0.2%
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Australia’s S&P/ASX 200 Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0826
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The Japanese yen was little changed at 151.66 per dollar
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The offshore yuan was little changed at 7.2508 per dollar
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The Australian dollar fell 0.2% to $0.6522
Cryptocurrencies
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Bitcoin rose 1% to $70,493.7
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Ether rose 1.1% to $3,614.31
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck.
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