(Bloomberg) — Hong Kong stocks advanced ahead of earnings from tech bellwethers, while other Asian markets traded rangebound as investors awaited US inflation readings due this week.
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The Hang Seng Tech Index jumped more than 1%, lifted by gains in Tencent Holdings Ltd. and Alibaba Group Holding Ltd., which report quarterly results later Tuesday. Shares were steady in Japan and South Korea while those in Australia dipped.
Investors are looking to China’s Big Tech earnings, which kick off this week, for confidence that a nascent rally in the nation’s stocks can continue. With the latest economic data pointing to a patchy recovery, any earnings misses may cool the market’s momentum.
“With all eyes on earnings from Tencent and Alibaba, both will need to deliver earnings above consensus results and inspiring guidance as expectations are high,” according to Chris Weston, head of research at Pepperstone Group.
US futures were steady in Asia trading after the S&P 500 closed little changed. Later Tuesday, economists will parse US producer prices data to assess the impact of categories that feed into the Federal Reserve’s preferred inflation gauge. Chair Jerome Powell is also scheduled to speak. US consumer price index due Wednesday is projected to show moderation while still remaining too high to warrant rate cuts.
Japan’s 20-year government bond yield climbed to its highest level since 2013 on speculation the central bank will reduce debt-buying amounts at its regular operations again in response to sustained yen weakness. The yen weakened slightly against the dollar, falling for a third straight day.
A Bloomgerg dollar index was flat as US 10-year Treasury yields were little changed.
Some prominent trading desks are warning that investors should gear up for a potential break in the calm that’s come over stocks. The options market is betting the S&P 500 will move 1% in either direction after Wednesday’s CPI, according to Andrew Tyler at JPMorgan Chase & Co. On Monday, a Fed Bank of New York survey highlighted an increase in expectations for inflation.
“The key risk is a hotter CPI print,” Tyler said. “But upcoming macro data creates a two-tailed risk — with one tied to stronger-than-expected growth fueling inflation concerns and the other being weaker growth fueling either recession or ‘stagflation’ concerns.”
In Asia, investors will be further parsing the impact of China’s announcement that it will start selling the first batch of its 1 trillion yuan ($138 billion) of ultra-long special sovereign bonds this week. President Xi Jinping’s government is stepping up fiscal support to help the economy, which is facing pressure from a housing crisis and weak consumer confidence.
In Australia, Treasurer Jim Chalmers on Tuesday will announce the government’s books are in the black for a second straight year, putting the nation’s fiscal standing near the top of developed-world counterparts.
On corporate news, market watchers will also be looking for the next step in BHP Group’s takeover battle, after its second approach for rival Anglo American Plc that valued the miner at $43 billion was rejected.
In commodities, oil held a gain before the release of OPEC’s market outlook, with traders looking for clues on whether supply curbs will be extended, and US inflation data that will shape expectations for monetary policy.
Key events this week:
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Germany CPI, ZEW survey expectations, Tuesday
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Bank of England Economist Huw Pill speaks, Tuesday
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US PPI, Tuesday
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Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot speak, Tuesday
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China rate decision, Wednesday
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Eurozone industrial production, GDP, Wednesday
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US CPI, retail sales, business inventories, empire manufacturing, Wednesday
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Minneapolis Fed President Neel Kashkari speaks, Wednesday
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Japan GDP, industrial production, Thursday
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US housing starts, initial jobless claims, industrial production, Thursday
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Philadelphia Fed President Patrick Harker speaks, Thursday
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Cleveland Fed President Loretta Mester speaks, Thursday
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Atlanta Fed President Raphael Bostic speaks, Thursday
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China property prices, retail sales, industrial production, Friday
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Eurozone CPI, Friday
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US Conf. Board leading index, 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
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Japan’s Topix was little changed
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Australia’s S&P/ASX 200 fell 0.2%
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Hong Kong’s Hang Seng rose 0.8%
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The Shanghai Composite rose 0.1%
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Euro Stoxx 50 futures were little changed
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Nasdaq 100 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 $1.0786
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The Japanese yen fell 0.1% to 156.44 per dollar
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The offshore yuan was little changed at 7.2417 per dollar
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The Australian dollar was little changed at $0.6603
Cryptocurrencies
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Bitcoin fell 0.2% to $62,979.01
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Ether rose 0.1% to $2,957.05
Bonds
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The yield on 10-year Treasuries was little changed at 4.49%
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Japan’s 10-year yield advanced two basis points to 0.960%
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Australia’s 10-year yield was little changed at 4.33%
Commodities
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West Texas Intermediate crude rose 0.1% to $79.23 a barrel
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Spot gold rose 0.1% to $2,339.11 an ounce
This story was produced with the assistance of Bloomberg Automation.
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