June 19, 2024

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Asian stock markets are in a contemplative mood for the earnings week

Asian stock markets are in a contemplative mood for the earnings week
  • Asian stock markets:
  • The Nikkei rose 0.2% in sluggish trade, and US stock futures fell
  • The BoJ meeting marks a busy week for data
  • Analysts are looking for technology profits to beat the street

SYDNEY (Reuters) – Asian stocks were mostly lower on Monday in a week full of economic data and central bank meetings, along with earnings from tech giants that have kept the S&P 500 afloat so far this year.

Market movement was sluggish following Friday’s surprisingly strong surveys of business activity that boosted the case for higher interest rates.

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) is down 0.4%, while Japan’s Nikkei (.N225) is up 0.2%. Chinese blue chips (.CSI300) fell 0.4%.

In Australia, there was some weakness in mining stocks (.AXJO) after Chile moved to consolidate state control over the lithium industry, which has the world’s largest reserves of the battery metal.

Both the EUROSTOXX 50 futures contract and the FTSE futures contract remain unchanged. S&P 500 and Nasdaq futures fell 0.3% ahead of an earnings-packed week.

Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) alone accounted for nearly half of the S&P 500’s gains during March, so there’s a lot riding on their outlook.

“We believe that powerhouses like Microsoft, Amazon and Google should all deliver cloud results that meet and likely exceed 1Q Street expectations this week despite the recent market noise,” said analysts at Wedbush Securities.

“We also believe the key narrative of tech earnings season will be the AI ​​arms race and each Big Tech player pitching investors their AI ambitions/monetization strategy while Redmond battles Google and other tech powerhouses in the AI ​​prize case.”

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This week, the US House of Representatives may vote on the Republicans’ plan to raise the debt ceiling in exchange for spending cuts. Weak tax receipts mean that the government may run out of money earlier than expected, and default risk has seen credit default swaps rise in the United States.

Figures on wages and economic growth in the US due out this week are likely to add to the tightening situation. The Atlanta Federal Reserve’s influential GDP tracker saw the US economy grow 2.5% annually in the first quarter, a shade slower than the previous quarter.

The Bank of Japan gets a new president

Markets are putting an 86% chance that the Fed will raise interest rates by a quarter point at its meeting in the first week of May, fully expecting a similar hike from the ECB with some risk of a half point move. And

The central banks of Canada and Sweden meet this week, but most of the attention will be on the Bank of Japan at the first meeting chaired by its new governor, Kazuo Ueda.

On Monday, Ueda said the easing policy should continue because inflation remains below 2% in trend.

Only three out of 27 economists polled by Reuters expect the Bank of Japan to start tapering its yield curve control policy soon, but there are reports that the central bank is considering a comprehensive review of the impact of easing.

“The media background suggests no amendments to YCC are expected, but writing is clearly pending and the risk is of a more fundamental change at the next meeting,” said Tapas Strickland, NAB’s Head of Market Economics.

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In contrast, the head of the Belgian Central Bank warned in an article published in the Financial Times on Monday that investors underestimate how high borrowing costs will rise in the eurozone.

The difference in policy between Japan and the rest of the developed world has caused the yen to weaken steadily in the past few weeks, with the euro in particular hitting a six-month high.

The single currency settled at 147.56 yen on Monday, while the dollar settled at 134.35.

The euro settled at $1.0980, within sight of its one-year high of $1.1075.

The rise in dollar and bond yields weighed on gold, which lost 1.2% last week and was last at $1,979 an ounce.

Chicago wheat rose nearly 1% after Russia threatened to end a grain deal allowing Ukrainian exports, raising concerns about global supplies.

Oil prices also fell last week, although planned production cuts from OPEC provided some support.

Brent crude fell 66 cents on Monday to $81.00 a barrel, while US crude fell 67 cents to $77.20 a barrel.

Reporting from Wayne Cole. Edited by Christopher Cushing

Our standards: Thomson Reuters Trust Principles.