Equity markets in Asia look set to open higher Friday after a stellar quarter for US stocks ended on a positive note amid speculation the Federal Reserve will be able to achieve a soft landing.
While much of the Asian region including Australia, Hong Kong and Singapore is closed for holidays, markets in Japan, mainland China and South Korea are open for trading. Futures contracts for the Nikkei 225 index point higher, while a gauge of US-listed Chinese companies suggest potential gains in the mainland.
Wall Street traders sent the S&P 500 to its 22nd record this year after data showed the economy is in good shape, offsetting the latest Fedspeak that reinforced bets officials will be in no rush to cut rates. A $4 trillion surge in US equity values in just three months has startled doomsayers, while leaving a host of strategists scrambling to update their 2024 targets.
“We think the market’s view of where economic fundamentals are heading, rather than any one economist’s or strategist’s view, is what ultimately drives stock market pricing,” said Lori Calvasina at RBC Capital Markets.
Stocks edged up after spending most of the day struggling for direction, with traders remaining reluctant to make any big bets before the Fed’s preferred inflation gauge and Jerome Powell’s remarks Friday — when markets will be closed.
In Japan, traders are on alert for potential swings in the yen in the wake of a deluge of data due Friday after officials stepped up warnings this week to stem the currency’s slide. While the yen has since strengthened a little, it remains close to levels not seen in decades.
Tokyo’s March consumer price index will probably show a cooler inflation print, but may still come in above the 2% level the Bank of Japan targets for nationwide inflation, according to Bloomberg Economics. Also due are the jobless rate, retail sales and industrial output.
Prime Minister Fumio Kishida weighed in Thursday in support of the need to keep monetary easing in place, while warning against a weakening yen.
On China’s corporate front, one of the nation’s biggest property firms delayed its earnings report while another posted a historic profit decline. Country Garden Holdings Co. announced late Thursday it will miss a deadline for reporting annual results, saying it needs more information. Developer China Vanke Co. said net profit tumbled 46% last year.
Elsewhere, gold hit a fresh all-time high, extending a weeks-long rally fueled by bets on Fed rate cuts and deepening geopolitical tensions. Oil scored a 16% quarterly gain in the latest sign that export curbs by OPEC and its allies are reining in global supplies.
Back in the US, the S&P 500 topped 5,250, ending with a quarterly rally of over 10%. Two-year yields, which are more sensitive to imminent Fed moves, climbed five basis points to 4.62% in a shortened session ahead of the holiday, after Fed Governor Christopher Waller’s remarks that he’d like to see “at least a couple months of better inflation data” before slashing rates. The dollar extended its quarterly advance.
In economic data, the government’s two main measures of activity — gross domestic product and consumer spending — posted strong advances at the end of last year. Consumer sentiment rose markedly toward the end of March, supported by strong stock-market gains and expectations that inflation will continue to ease.
The S&P 500 will end the year at 5,300 as the consensus real US GDP forecast has climbed in a positive sign for stocks, according to RBC Capital Markets’ Calvasina, who raised her target from 5,150.
Since World War II, two straight quarters of double-digit S&P 500 gains would be followed by some weakness in the following month — with the gauge climbing by an average of 12.27% one year later, according to Bespoke Investment Group.
Corporate Highlights:
Apple Inc.’s overseas suppliers have ramped up production of the company’s long-anticipated new iPads and a launch is planned for early May, according to people with knowledge of the matter.
Home Depot Inc. told investors it expects to take on $12.5 billion of debt to help fund its planned purchase of building-products distributor SRS Distribution Inc.
Walgreens Boots Alliance Inc. narrowed its fiscal 2024 guidance citing a challenging retail environment, including reduced consumer spending.
B. Riley Financial Inc., the boutique investment bank facing questions about its dealings with a former business partner, gained extra time to supply missing financial data to its lenders.
Palantir Technologies Inc. was cut to sell at Monness, Crespi, Hardt & Co., which cited “egregiously rich” valuation.
Estee Lauder Cos. was raised to buy at Bank of America Corp., which said the company’s earnings have now bottomed.
Key events this week:
Good Friday. Exchanges closed in US and many other countries in observance of holiday. US federal government is open
Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
US personal income and spending, PCE deflator, Friday
San Francisco Fed President Mary Daly speaks, Friday
Fed Chair Jerome Powell speaks, Friday. – Bloomberg
