(Bloomberg) — Stellar earnings reports from Microsoft Corp. and Alphabet Inc triggered an after-hours tech rally that sent US futures higher. Japan’s stocks were rangebound before a monetary policy decision.
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Futures contracts for the S&P 500 rallied 0.8% in early Asian trading, while those for the Nasdaq 100 rose more than 1%. The moves unwound Thursday’s losses of around 0.5% for each benchmark and came after Microsoft and Alphabet both beat Wall Street profit estimates. Snap Inc. also rallied in late trading on a bullish revenue projection.
Japanese stocks were mixed in opening trade on Friday, while South Korean shares rose. Australian shares retreated, weighed down by BHP Group Ltd., which declined following news of its takeover bid for Anglo American Plc. Futures contracts in Hong Kong also fell.
The yen was little changed before a Bank of Japan interest-rate decision and a Jiji report said authorities will consider measures to shrink government bond purchases at the Friday meeting. Policymakers are forecast to leave rates unchanged after the yen slid to the lowest level against the dollar since 1990 this week.
Treasuries opened little changed following further losses on Thursday when the latest US data pushed back expectations for Federal Reserve interest-rate cuts. Australian 10-year yields rose more than 10 basis points, while New Zealand’s equivalent benchmark yield climbed around seven basis points.
The US core PCE price index advanced at a faster-than-expected 3.7% clip. The print combined with a US gross domestic product data that trailed all forecasts to rekindle the specter of stagflation.
“This report was the worst of both worlds: economic growth is slowing and inflationary pressures are persisting,” said Chris Zaccarelli at Independent Advisor Alliance. “The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing.”
Tech Optimism
A $250 billion exchange-traded fund tracking the Nasdaq 100 (ticker: QQQ) climbed 1.2% after the close of regular trading on Thursday. In a sigh of relief to investors worried about lofty valuations of the sector that has powered the bull market, Alphabet crushed sales estimates and announced a dividend. Fellow megacap Microsoft also beat forecasts, lifted by corporate demand for the software maker’s cloud and artificial-intelligence offerings.
Investors have shown they are excited about the prospects of AI — but want tech companies to continue to focus on revenue and profit in the meantime.
Like other big techs, Alphabet has been plowing money into developing AI, a strategy that has helped drive demand for its cloud services. Google is a distant third in the cloud-computing market, trailing Amazon.com Inc. and Microsoft, but the company’s prowess in AI could help it close the gap.
Key events this week:
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Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday
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US personal income and spending, PCE deflator, University of Michigan consumer sentiment, Friday
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Exxon Mobil, Chevron earnings, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.7% as of 9:03 a.m. Tokyo time
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Nasdaq 100 futures rose 1.1%
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Hang Seng futures fell 0.1%
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Japan’s Topix was little changed
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Australia’s S&P/ASX 200 fell 0.6%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0725
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The Japanese yen was little changed at 155.62 per dollar
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The offshore yuan was little changed at 7.2563 per dollar
Cryptocurrencies
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Bitcoin fell 0.4% to $64,527.01
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Ether fell 0.6% to $3,155.96
Bonds
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The yield on 10-year Treasuries was little changed at 4.71%
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Japan’s 10-year yield advanced four basis points to 0.930%
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Australia’s 10-year yield advanced 14 basis points to 4.54%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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