(Bloomberg) — Asian equity benchmarks were poised to fluctuate following a mixed day on Wall Street on speculation the tech sector rally may be running out of steam.
Futures showed Hong Kong and Australian equities may edge higher early Tuesday, while Japanese stocks looked flat. While various sectors outside the technology world advanced on Monday, Nvidia (NVDA) extended a three-day rout of about $430 billion — crossing the technical threshold of a correction. Energy and financial shares rose while the tech-heavy Nasdaq 100 (NQ=F) lost over 1%.
The S&P 500 is expected to close the year at 5,606, according to a median of 586 responses in a survey. That’s less than 3% above current levels, indicating that the rally has little left after a 14% gain so far in 2024. Additionally, almost half of survey participants expect a correction to begin later this year.
“We remain concerned about a near-term unwind of many year-to-date leaders,” said Jonathan Krinsky at BTIG. “If the S&P 500 is going to avoid a bigger pullback into July, bulls need to see continued rotation below the surface.”
Treasury 10-year yields (10Y=F) fell two basis points to 4.23% while Bitcoin rebounded Tuesday after plunging in the previous session. Losses are piling up in the crypto market after its second-worst weekly decline of 2024, a reflection of cooling demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.
In Asia, traders will be watching for further signs of pressure on the world’s second-biggest economy. Data released Monday showed China’s fiscal revenue shrank at the fastest pace in more than a year, fueling expectations that the government could make another rare mid-year budget revision to aid a recovery.
Elsewhere, Japan’s top currency official warned that authorities stood ready to intervene in markets 24 hours a day if necessary as the yen remained under pressure, not far from the weakest level in about 34 years. Some traders even see the potential for the yen to slump as far as 170 per dollar.
Following a tech-led rally, Deutsche Bank’s Binky Chadha said US equities are set to pause. There’s a lot of good news baked into markets, and if that optimism proves unjustified, there could be downside risks, Lori Calvasina at RBC Capital Markets noted. To John Stoltzfus at Oppenheimer, while the bull market appears sustainable, some profit-taking should be expected.
“A decline in the tech sector is certainly possible, even if the sector is going to do well during the summer months overall,” Matt Maley at Miller Tabak noted. “Even if you agree with the most-bullish scenario for the AI phenomenon for the second half of 2024, no group moves in a straight line.”
In commodities, oil climbed, with a softer dollar and rising tensions with Russia providing support. The easing greenback also helped gold erase some of Friday’s loss, edging up 0.3%.
Key events this week:
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US Conference Board consumer confidence, Tuesday
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Fed’s Lisa Cook, Michelle Bowman speak, Tuesday
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US new home sales, Wednesday
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China industrial profits, Thursday
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Eurozone economic confidence, consumer confidence, Thursday
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US durable goods, initial jobless claims, GDP, Thursday
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Nike releases earnings, Thursday
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Japan Tokyo CPI, unemployment, industrial production, Friday
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US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
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Fed’s Thomas Barkin speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 8:31 a.m. Tokyo time
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Hang Seng futures rose 0.5%
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S&P/ASX 200 futures 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 $1.0732
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The Japanese yen was little changed at 159.69 per dollar
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The offshore yuan was little changed at 7.2838 per dollar
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The Australian dollar was little changed at $0.6653
Cryptocurrencies
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Bitcoin rose 1.2% to $60,193.54
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Ether rose 1% to $3,342.57
Bonds
Commodities
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West Texas Intermediate crude was little changed
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Spot gold fell 0.2% to $2,330.94 an ounce
This story was produced with the assistance of Bloomberg Automation.
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