Asian stocks held to tight ranges Tuesday as investors await fresh catalysts after US markets were closed for a holiday Monday.
Australian stocks fell, weighed down by BHP Group after the miner missed profit estimates, while Japan stocks advanced slightly. Futures contracts for Hong Kong shares edged higher, while contracts for US equities were mostly unchanged after Monday’s holiday.
A gauge of global stocks sits just 1.1% from its peak after the S&P 500 set a fresh record last week, while the region-wide Euro Stoxx 50 trades near a two-decade high.
In China, investors will be keeping a close eye on Tuesday’s loan prime data, with some economists expecting commercial lenders to reduce their rates. Chinese mainland equity gauges fell short of earlier optimism Monday in the first session back following the Chinese New Year holiday. A rise in trading volume for several exchange-traded funds in China offered a clue that state-backed funds were continuing to support the market.
“It was kind of disappointing because with the replacement of the securities regulator chief and better-than-expected holiday spending data, investors were expecting China to reopen with a rally,” said Daniel Tan, portfolio manager at Grasshopper Asset Management. Investor confidence is still low and hence, “every small rally has been met with fresh selling,” he added.
The Thai baht fell after Prime Minister Srettha Thavisin called for an unscheduled central bank meeting to cut the nation’s key interest rate. An index of the dollar edged higher, strengthening against most of its Group-of-10 peers.
Treasuries yields rose as trading resumed in Asian hours after also being shut Monday. Australian and New Zealand 10-year yields also edged higher.
In Australia, BHP Group, the world’s largest miner, reported $6.57 billion in underlying profits, less than consensus estimates, and said demand from top customer China was healthy despite weakness in housing.
Rate-Cut Adjustments
Interest rate expectations remain firmly in focus. Swaps are now pricing about 90 basis points of Federal Reserve rate cuts in 2024 — from more than 150 basis points at the start of February. In Europe, wagers have been whittled down to about 100 basis points, from 150.
“Markets have adjusted to the idea that rate cuts would come later and probably be less important than what was originally priced,” Vincent Juvyns, global market strategist for JPMorgan Asset Management, said on Bloomberg Television. The move upward is also “really driven by decent earnings growth that we have seen during the fourth quarter,” he added.
Earnings from bellwether Nvidia Corp. Wednesday could provide new impetus for equities as investors try to gauge the strength of the global economy. The chip giant has surpassed the market value of Amazon.com Inc on the expectation it will be a big winner from artificial intelligence developments.
Other potential catalysts for markets this week include Fed January meeting minutes to be released Wednesday and Eurozone inflation data due Thursday.
Elsewhere, gold was flat after edging higher Monday to trade around $2,017 per ounce. West Texas Intermediate was also little changed against the backdrop of ongoing tensions in the Red Sea, a vital trade route.
Some of the key events this week:
- Reserve Bank of Australia Feb. meeting minutes, Tuesday
- China loan prime rates, Tuesday
- BHP Group Ltd earnings, Tuesday
- European Central Bank publishes euro-area indicator of negotiated wage rates, Tuesday
- Rio Tinto Plc earnings, Wednesday
- Eurozone consumer confidence, Wednesday
- Nvidia Corp earnings, Wednesday
- Federal Reserve Jan. meeting minutes, Wednesday
- Atlanta Fed President Raphael Bostic speaks, Wednesday
- Eurozone CPI, PMI, Thursday
- European Central Bank issues account of Jan. 25 meeting, Thursday
- Fed Governor Lisa Cook, Minneapolis Fed President Neel Kashkar speak, Thursday
- China property prices, Friday
- European Central Bank executive board member Isabel Schnabel speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:01 a.m. Tokyo time
- Hang Seng futures rose 0.3%
- Japan’s Topix rose 0.2%
- Australia’s S&P/ASX 200 was little changed
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0776
- The Japanese yen was little changed at 150.23 per dollar
- The offshore yuan was little changed at 7.2130 per dollar
- The Australian dollar fell 0.1% to $0.6531
Cryptocurrencies
- Bitcoin fell 0.3% to $51,771.32
- Ether fell 0.7% to $2,946.95
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.31%
- Australia’s 10-year yield advanced two basis points to 4.19%
Source: Bloomberg
