Asia Stocks to Rise After Earnings-Led U.S. Climb: Markets Wrap

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(Bloomberg) — Asian stocks look set to climb Thursday after solid company earnings boosted Wall Street, easing concerns about peak economic growth and coronavirus flareups. The dollar and Treasuries declined.

Futures rose in Australia and Hong Kong, while Japan is shut for a holiday. U.S. futures were steady after the S&P 500’s biggest back-to-back advance in two months, led by cyclical stocks like energy and financials. A gauge of small caps advanced almost 2%. Verizon Communications Inc. and Coca-Cola Co. rose after better-than-estimated results, while United Airlines Holdings Inc. predicted profits ahead despite concerns about Covid-19’s threat to travel.

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Ten-year Treasury yields headed back toward 1.3% as the recent rally in bonds fizzled. An auction of 20-year debt fared poorly. Cash Treasuries won’t trade in Asia because of the Japan holiday. New Zealand’s 10-year yield jumped.

Bitcoin soared after some prominent voices discussed prospects for the digital currency at a conference. Billionaire Elon Musk said his space exploration company SpaceX owns the digital token. Ark Investment Management’s Cathie Wood urged firms to consider the “explosive” Bitcoin growth.

Corporate performance and ongoing central bank policy support are tempering some of the concerns over peaking global growth and the spread of delta virus variant that roiled markets at the start of the week. More than 85% of the S&P 500 firms reporting so far have beaten analysts predictions, according to data compiled by Bloomberg. U.S. earnings calls have also underlined the pick up in inflation, with many executives highlighting greater pricing power.

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The “reopening of the economy is not an event but rather a process, which in our opinion is still not priced-in, and especially not now given recent market moves,” wrote JPMorgan Chase & Co. strategists led by Dubravko Lakos-Bujas. “This does not signal the beginning of a down cycle.”

Not everyone is upbeat. Guggenheim Investments Chairman Scott Minerd warned on Bloomberg Television that September and October could be rough for stocks and U.S. equities could pull back 15%.

Meanwhile, Federal Reserve Chair Jerome Powell enjoys broad support for his renomination among top White House advisers, though the decision is expected later this year and hasn’t yet been put in front of President Joe Biden, according to people familiar with the matter.

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Elsewhere, oil steadied after jumping the most since mid-April. In Asia, traders are monitoring the tribulations of China Evergrande Group. Four banks suspended some mortgages to buyers of its unfinished residential properties in the city, the latest sign of dwindling confidence in the developer’s financial strength.

Some key events to watch this week:

European Central Bank rate decision ThursdayBank Indonesia rate decision ThursdayU.S. existing home sales ThursdayThe Tokyo Summer Olympics begin Friday

Here are some of the main market moves:

Stocks

S&P 500 futures climbed less than 0.1% as of 8:11 a.m. in Sydney. The S&P 500 rose 0.8%Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.8%Australia’s S&P/ASX 200 Index futures rose 0.9%Hang Seng Index futures gained 0.7%

Currencies

The Japanese yen was at 110.29 per dollarThe offshore yuan traded at 6.4638 per dollarThe Bloomberg Dollar Spot Index fell 0.2%The euro was at $1.1797

Bonds

The yield on 10-year Treasuries advanced seven basis points to 1.29% Wednesday

Commodities

West Texas Intermediate crude was little changed at $70.32 a barrelGold was at $1,803.99 an ounce

©2021 Bloomberg L.P.

Bloomberg.com

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