(Bloomberg) — Asian shares mostly rose after US stocks delivered small gains to close at fresh records, with Chinese markets showing mixed reaction to Beijing’s latest pledge to arrest a stock rout.
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A gauge of Chinese stocks listed in Hong Kong rose as much as 1.3% in early trade, while the CSI 300 mainland benchmark fell 0.7% after losing almost 1% earlier. The varied performance came after Chinese Premier Li Qiang flagged more “forceful” measures to stabilize his country’s slumping stock market.
Elsewhere in Asia, Japanese equities looked poised for a third straight day of increases before the Bank of Japan’s monetary policy decision, while those in South Korea and Australia also climbed.
There are “signs of capitulation” in Chinese stocks amid relentless selling as investors fret over structural challenges in China’s economy and the lack of a forceful policy response, Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs Group Inc., said on Bloomberg TV. “When the actual policy, which has been hinted at, doesn’t fully come through, then people have been selling.”
In Japan, the central bank is expected to keep its main monetary policy settings steady Tuesday. Attention will shift on how Governor Kazuo Ueda assesses progress made toward achieving the sustainable inflation needed for ending the negative interest rate. The yen was steady.
The lingering concerns about Chinese equities are in stark contrast to the US, where investors are weighing strong economic signals and prospects for corporate earnings. Wall Street shares are shaking off a rocky start to the year on bets the Federal Reserve will cut rates and the artificial-intelligence boom will keep fueling profit growth.
The S&P 500 hovered near 4,850 on Monday. Treasuries were flat in early Asia trading after 10-year yields declined two basis points to 4.10% Monday. The dollar was little changed as well.
“The story is changing for bulls,” said David Donabedian at CIBC Private Wealth US. “Investor optimism had been driven by the belief there would be aggressive rate cuts by the Fed. Now investor belief has pivoted to view the economy as bullet-proof. No matter how high interest rates go, the economy will continue to glide right through.”
Back to the Highs
Last week’s record close for stocks in the US has pulled valuations back to the highs seen last July. But a closer look shows that the market isn’t as expensive as it appears, according to Citigroup Inc.’s Scott Chronert.
Gains in Apple Inc., Microsoft Corp., Nvidia Corp., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Tesla have powered the resurgence on Wall Street. The equally weighted version of the S&P 500 strips out some of their outsized influence and results in a ratio of around 16 times forward earnings, a discount of 17% to the benchmark’s standard valuation.
“With AI set to remain the key theme driving global tech stocks again this year and the rest of the decade, we maintain our preference for the semiconductor and software sectors and see opportunities in those involved in memory and AI edge-computing,” said Solita Marcelli at UBS Global Wealth Management.
Even as the S&P 500 closed Friday at an all-time high, money managers and analysts are contending with data that signals US economic resilience and Fed officials who’ve pushed back against reducing interest rates too soon.
The latest warning for investors unleashing dovish monetary wagers across the board: Two thirds of Bloomberg Markets Live Pulse respondents said that betting on early monetary easing is the “most foolish” among popular trades heading into 2024.
Earnings season kicks into high gear this week, with companies including Netflix Inc., Tesla Inc. and Intel Corp. due to report their numbers.
Key events this week:
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Japan BOJ rate decision, Tuesday
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Eurozone consumer confidence, Tuesday
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New Hampshire holds first-in-the-nation presidential primary, Tuesday
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European Central Bank issues bank lending survey, Tuesday
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Canada rate decision, Wednesday
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Eurozone S&P Global Services & Manufacturing PMI, Wednesday
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US S&P Global Services & Manufacturing PMI, Wednesday
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Eurozone ECB 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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Japan Tokyo CPI, Friday
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US personal income & spending, Friday
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Bank of Japan issues minutes of policy meeting, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 10:30 a.m. Tokyo time The S&P 500 rose 0.2%
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Nasdaq 100 futures were little changed. The Nasdaq 100 was little changed
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Japan’s Topix rose 0.4%
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Australia’s S&P/ASX 200 rose 0.6%
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Hong Kong’s Hang Seng rose 0.6%
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The Shanghai Composite fell 0.4%
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Euro Stoxx 50 futures fell 0.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0878
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The Japanese yen was little changed at 148.11 per dollar
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The offshore yuan was little changed at 7.1964 per dollar
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The Australian dollar rose 0.1% to $0.6579
Cryptocurrencies
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Bitcoin was little changed at $39,780.07
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Ether rose 0.1% to $2,327.45
Bonds
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The yield on 10-year Treasuries was little changed at 4.10%
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Japan’s 10-year yield declined one basis point to 0.640%
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Australia’s 10-year yield declined two basis points to 4.20%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott and John Cheng.
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