(Bloomberg) — Stocks in Asia rose as traders weighed prospects for Federal Reserve interest-rate cuts after Jerome Powell cited signals that the US is back on a disinflationary path.
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Equity benchmarks climbed in Japan, Australia and South Korea, while futures for Hong Kong stocks pointed to a positive start. Contracts for the S&P 500 edged lower after the benchmark closed above 5,500 for the first time — the gauge’s 32nd record this year — to extend a blistering rally that has left analysts scrambling to update their targets. Tesla Inc. surged 10% to lead gains in megacaps, helping the Nasdaq 100 close above the 20,000 mark for the first time.
The new all-time high close in the S&P 500 and Nasdaq “could also be taken as another win given the psychological significance that ‘round numbers’ hold,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “Asia too will take some inspiration, not just from the net change in US markets, but because it wasn’t just tech that has propped up the respective indices, and we’ve seen somewhat better breadth and participation.”
In other markets, oil climbed to trade near a two-month high, while the Bloomberg Dollar Spot Index was little changed. Treasury yields were steady after dropping Tuesday for the first time in three sessions.
In Asia, traders will be looking for signs of improvement in China’s beleaguered housing market after China Vanke Co.’s sales stalled and Country Garden Holdings Co.’s slumped further last month.
Meanwhile, the central bank’s plan to borrow bonds may slow, according to analysts. The People’s Bank of China has been pushing back against the nation’s bond rally for months and hinted it may sell some of its own holdings to cool the advance in May.
In the US, equities keep defying doomsayers amid solid corporate earnings, the artificial-intelligence mania and expectations that interest rates will drop, adding more than $16 trillion to the S&P 500’s value from a closing low on October 2022. A lack of any meaningful pullback has given bulls conviction that the rally is sustainable.
The S&P 500 will surge to new peaks by the end of the year as economic strength outweighs market risks, according to Lori Calvasina at RBC Capital Markets. She raised her year-end target to 5,700 from 5,300 — among the highest on Wall Street — despite the fact that the market has “gotten a bit ahead of itself.”
“Our suspicion is that 2024’s economy will end up being strong enough to justify a strong move in the S&P 500 for the year as a whole,” Calvasina said.
On the economic front, data Tuesday showed job openings unexpectedly rose, interrupting a trend that underscored a slowdown in labor seen as key for Fed easing.
Powell said there’s been a “substantial” move toward a better balance between the supply of and demand for workers. He described the job market as strong, but said it is cooling off appropriately so.
Wall Street is gearing up for a slew of economic data that will hit the tape Wednesday — when the market closes early due to Thursday’s US holiday.
And that’s all ahead of the all-important US payrolls reading due Friday. Economists expect the report to show employers added about 190,000 payrolls in June and the unemployment rate held at 4%.
US PREVIEW: Minutes to Show Fed’s Rate-Cut Forecast a Close Call
Key events this week:
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China Caixin services PMI, Wednesday
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Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
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US Fed minutes, ADP employment, ISM Services, factory orders, initial jobless claims, durable goods, Wednesday
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Fed’s John Williams speaks, Wednesday
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UK general election, Thursday
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US Independence Day holiday, Thursday
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Eurozone retail sales, Friday
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US jobs report, 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 9:16 a.m. Tokyo time
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Hang Seng futures rose 0.5%
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Japan’s Topix rose 0.2%
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Australia’s S&P/ASX 200 rose 0.3%
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Euro Stoxx 50 futures rose 0.3%
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Nasdaq 100 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0751
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The Japanese yen was little changed at 161.51 per dollar
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The offshore yuan was little changed at 7.3081 per dollar
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The Australian dollar was little changed at $0.6670
Cryptocurrencies
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Bitcoin rose 0.4% to $62,139.5
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Ether rose 0.2% to $3,420.43
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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