(Bloomberg) — Stocks in Asia broadly advanced on rallies in some of the world’s largest technology companies during a week that includes Federal Reserve boss Jerome Powell’s congressional testimony and China’s National People’s Congress.
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Technology shares outperformed the regional stock gauge, with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. leading the gains. The blue-chip gauge Nikkei-225 Stock Average in Japan also surpassed 40,000 for the first time while South Korea’s Kospi index rose as much as 1.5%. Their advances followed the strong rallies in US peers on Friday.
“The Nikkei 225’s 40,000 is certainly a key psychological level, which could offer some resistance for the index and bring volatility,” said Charu Chanana, strategist at Saxo Capital Markets based in Singapore. “But when structural factors remain in favor, and yen weakness continues, it is likely to be more a bullish signal rather than fueling any concerns of Japanese stocks being overbought.”
Chinese stocks swung between gains and losses as the nation’s equities and the yuan are in focus ahead of the 14th National People’s Congress, an annual parliamentary gathering in Beijing, that will begin Tuesday as markets await more stimulus measures to aid a soft economy. Most healthcare stocks jumped in anticipation of policy support from the NPC.
“We still think this year earnings growth will be decent. We’re looking for about 8%-10% earnings growth,” Kinger Lau, a strategist at Goldman Sachs Group Inc., said on China stocks on Bloomberg Television. Combined with current low valuations and potential policy support coming from the NPC, “we think we have a pretty good setup for the market to do better in the next 10-12 months.”
Oil steadied near the highest level this year after OPEC+ extended its production cuts to stave off a global crude surplus. US crude traded around $80 a barrel in Asia, holding the level it hit for the first time in almost four months on Friday.
Treasury yields edged higher in Asian trading after the rate on the policy sensitive two-year fell nine basis points Friday following weaker than expected activity data and cautious comments from Fed officials. The dollar traded in tight ranges against its Group-of-10 peers, while the South Korean won strengthened to the highest level in a week amid improving exports.
In credit, Adani Group began marketing it first dollar bond since a report by short seller Hindenburg Research in an attempt to rebuild investor confidence.
Powell’s Testimony
The rally in US markets will likely hinge on jobs data and Powell’s testimony this week as bets for the start of the Fed’s easing cycle were refined amid recent data indicating a resilient US economy. Swaps traders now see the first cut in July, compared with the May estimate they were pricing at the beginning of last month, according to data compiled by Bloomberg.
“We don’t expect the chair to stray very far from the Fed’s recent messaging — officials are in a “wait-and-see” mode as there’s still a lot of ambiguity in the data,” John Briggs, global head of desk strategy at NatWest Markets wrote in a note. Government bond yields “have pushed toward their highs of recent ranges, and we think further large corrections towards higher yields is a lot less likely from here.”
The stock rally is showing little signs of slowing as US corporate earnings grew nearly 8% in the fourth quarter, helping offset macroeconomic uncertainty. Meantime, the frenzy around artificial-intelligence has blindsided Wall Street forecasters, spurring a race among strategists to keep up with a stock market rally that’s already blowing past their expectations when 2024 began.
Meanwhile, Bitcoin briefly breached the $64,000 level as it gained for the second day. Traders are betting the cryptocurrency will soon surpass the record price of almost $69,000, which was reached during the Covid pandemic.
Elsewhere this week, traders will be keeping an eye on Tokyo inflation, Australian growth data and a policy decision from the European Central Bank. The so-called Super Tuesday Republican and Democratic party primary votes, US jobs data and earnings from US consumer discretionary stocks are also due.
Key events this week:
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ECB Governing Council member Robert Holzmann speaks, Monday
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Fed’s Patrick Harker speaks, Monday
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Japan’s Tokyo CPI, Tuesday
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BOJ Governor Kazuo Ueda speaks, Tuesday
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China Caixin services PMI, Tuesday
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China kicks off its 14th National People’s Congress, Tuesday
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Eurozone S&P Global Services PMI, PPI, Tuesday
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US factory orders, ISM services, S&P Global Services PMI, Tuesday
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More than a dozen US states hold Republican and Democratic primaries, Tuesday
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Australia GDP, Wednesday
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UK Chancellor Jeremy Hunt unveils annual budget, Wednesday
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Eurozone retail sales, Wednesday
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Fed Chair Jerome Powell testifies before House committee, Wednesday
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Fed issues Beige Book survey of regional economic conditions, Wednesday
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Fed’s Neel Kashkari, Mary Daly speak, Wednesday
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China trade, forex reserves, Thursday
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BOJ board member Junko Nakagawa speaks, Thursday
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ECB rate decision, Thursday
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US initial jobless claims, trade, Thursday
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Fed Chair Jerome Powell testifies before Senate committee, Thursday
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Fed’s Loretta Mester speaks, Thursday
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US President Joe Biden delivers the State of the Union address, Thursday
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Eurozone GDP, Friday
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US nonfarm payrolls, unemployment, Friday
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Fed’s John Williams speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 12:31 p.m. Tokyo time
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Nikkei 225 futures (OSE) rose 0.5%
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Japan’s Topix was little changed
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Australia’s S&P/ASX 200 fell 0.1%
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Hong Kong’s Hang Seng was little changed
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The Shanghai Composite rose 0.2%
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Euro Stoxx 50 futures 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 $1.0844
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The Japanese yen was little changed at 150.15 per dollar
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The offshore yuan was little changed at 7.2088 per dollar
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The Australian dollar was little changed at $0.6525
Cryptocurrencies
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Bitcoin rose 1.4% to $63,724.51
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Ether was little changed at $3,481.72
Bonds
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The yield on 10-year Treasuries advanced one basis point to 4.19%
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Japan’s 10-year yield was unchanged at 0.710%
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Australia’s 10-year yield declined five basis points to 4.09%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Aya Wagatsuma and Winnie Hsu.
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