(Bloomberg) — Chipmakers led Asian stocks higher following a rebound on Wall Street ahead of key tech earnings. The yen strengthened against the dollar.
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Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. were the biggest contributors to the MSCI Asia Pacific Index’s advance, which came after a three-day loss. US equity futures slipped while Euro Stoxx 50 contracts climbed ahead of earnings from Tesla Inc. and Alphabet Inc. due later Tuesday.
Markets are taking a breather after sky-high valuations and sectoral rotation sparked a heavy tech selloff over the past few sessions. While US election developments still dominate headlines, Kamala Harris now has more than enough pledged delegates to clinch the Democratic presidential nomination — offering clarity on that front.
“Looks like slight easing in financial conditions and vol easing from highs of last week post events so broadly positive gains but not enough to sustain,” said Matthew Haupt, a portfolio manager at Wilson Asset Management. On US data, the key is “job markets now to see if slowdown progresses to downturn,” he added.
The yen strengthened against the dollar as traders look set to trim their carry positions during a summer holiday season. Some Bank of Japan officials are open to raising rates at the July meeting while others see weakness in consumer spending complicating their decision, according to people familiar with the matter.
A Bloomberg gauge of the dollar eased for the second session. Treasury yields slipped ahead of this week’s readings on the economy as well as the Federal Reserve’s preferred inflation gauge. For much of July, bets on a rate cut in September drove shorter-term bonds up — narrowing the gap with longer-dated maturities.
In the corporate world, shares of Kako Corp. slumped after South Korean authorities arrested its founder Brian Kim over allegations of market manipulation. Toyota Motor Corp. is set to announce the buyback of its own shares from major Japanese banks and insurers as part of a ¥1 trillion repurchase plan.
Elsewhere in Asia, India’s Finance Minister Nirmala Sitharaman is presenting the budget Tuesday, laying out economic priorities of a new coalition government under Prime Minister Narendra Modi.
Earnings Await
Earnings due in the region this week include SK Hynix Inc., Contemporary Amperex Technology Co. and Keyence Corp.
Almost two-thirds of respondents to Bloomberg’s Markets Live Pulse survey expect earnings to reinvigorate the US benchmark. A gauge of the “Magnificent Seven” climbed more than 2% Monday, led by gains in Tesla and Nvidia Corp.
After driving the rally in US stocks for most of the year, big tech slammed into a wall last week. Investors rotated from high-flying megacap shares to riskier, lagging parts of the market, spurred by bets on Fed rate cuts and the threat of more trade restrictions on chipmakers.
“Historically, presidential election years have been favourable for equity investors,” said Kieran Calder, head of equity research for Asia at Union Bancaire Privee in Singapore. “We think that the underlying economy and earnings picture is good for the market, and investors can be rewarded for looking past US election drama.”
In commodities, oil was steady near a six-week low as traders waited for fresh clues on market balances, including the outlook for US stockpiles.
Key events this week:
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Eurozone consumer confidence, Tuesday
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US existing home sales, Tuesday
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Alphabet, Tesla, LVMH earnings, Tuesday
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Canada rate decision, Wednesday
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US new home sales, S&P Global PMI, Wednesday
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IBM, Deutsche Bank earnings, Wednesday
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Germany IFO business climate, Thursday
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US GDP, initial jobless claims, durable goods, Thursday
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US personal income, PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.2% as of 6:31 a.m. London time
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Japan’s Topix rose 0.3%
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Australia’s S&P/ASX 200 rose 0.5%
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Hong Kong’s Hang Seng fell 0.3%
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The Shanghai Composite fell 0.6%
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Euro Stoxx 50 futures rose 0.1%
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Nasdaq 100 futures fell 0.3%
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Australia’s S&P/ASX 200 rose 0.5%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0889
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The Japanese yen rose 0.4% to 156.42 per dollar
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The offshore yuan was little changed at 7.2890 per dollar
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The Australian dollar fell 0.2% to $0.6631
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The British pound was little changed at $1.2928
Cryptocurrencies
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Bitcoin fell 2.4% to $66,525.6
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Ether fell 1.6% to $3,435.4
Bonds
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The yield on 10-year Treasuries declined one basis point to 4.24%
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Japan’s 10-year yield was unchanged at 1.060%
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Australia’s 10-year yield advanced three basis points to 4.34%
Commodities
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West Texas Intermediate crude was little changed
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Spot gold fell 0.1% to $2,393.73 an ounce
This story was produced with the assistance of Bloomberg Automation.
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