Technology drives gains in Asian stocks; Yen Strengthens: Markets Mixed

(Bloomberg) — Chipmakers led the rally in Asian stocks after a rally on Wall Street ahead of major technology sector earnings. The yen strengthened against the dollar.

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were the biggest contributors to the advance in the MSCI Asia Pacific index, which came after a three-day loss. U.S. stock futures fell while Euro Stoxx 50 contracts rose ahead of earnings from Tesla Inc. and Alphabet Inc. due Tuesday.

Markets are taking a breather after sky-high valuations and sector rotation sparked a sharp tech sell-off in recent sessions. While US election developments still dominate the headlines, Kamala Harris now has more than enough delegates to secure the Democratic presidential nomination – offering clarity on that front.

“It looks like a slight easing in financial conditions and a rebound from last week’s highs following the events, broadly positive gains but not enough to sustain,” said Matthew Haupt, portfolio manager at Wilson Asset Management. Regarding US data, the key is to “see now in labor markets whether the slowdown progresses into a recession,” he added.

The yen has strengthened against the dollar as traders appear willing to reduce their carrying positions during the summer holiday season. Some Bank of Japan officials are open to raising rates at its July meeting, while others see weakness in consumer spending as complicating their decision, according to people familiar with the matter.

A Bloomberg dollar gauge eased for the second session. Treasury yields fell ahead of this week’s readings on the economy as well as the Federal Reserve’s preferred inflation gauge. During much of July, bets on a rate cut in September drove the rise in shorter-term bonds – closing the gap with longer maturities.

In the corporate world, shares of Kako Corp. fell after South Korean authorities arrested its founder, Brian Kim, on allegations of market manipulation. Toyota Motor Corp. is expected to announce the buyback of its own shares from major Japanese banks and insurers as part of a 1 trillion yen buyback plan.

Elsewhere in Asia, Indian Finance Minister Nirmala Sitharaman presents the budget on Tuesday, setting out the economic priorities of a new coalition government under Prime Minister Narendra Modi.

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Earnings await

Earnings forecast in the region this week include SK Hynix Inc., Contemporary Amperex Technology Co.

Nearly two-thirds of respondents to Bloomberg’s Markets Live Pulse survey expect earnings to reinvigorate the U.S. benchmark index. A gauge of the “Magnificent Seven” rose more than 2% on Monday, led by gains in Tesla and Nvidia Corp.

After driving the rally in U.S. stocks for most of the year, big tech companies hit a wall last week. Investors have moved from large-cap stocks to riskier, lagging parts of the market, spurred by bets on Fed rate cuts and the threat of more trade restrictions on chipmakers.

“Historically, presidential election years have been favorable for equity investors,” said Kieran Calder, head of equity research for Asia at Union Bancaire Privee in Singapore. “We believe the underlying economic and earnings picture is good for the market, and investors could be rewarded for looking beyond the US election drama.”

In commodities, oil held steady near a six-week low as traders waited for new clues on market balances, including the outlook for U.S. inventories.

Main events this week:

• Eurozone consumer confidence, Tuesday

• US Existing Home Sales Tuesday

• Alphabet, Tesla, LVMH Earnings, Tuesday

• Canada Rate Decision Wednesday

• US new home sales, S&P Global PMI, Wednesday

• IBM and Deutsche Bank Earnings Wednesday

• IFO business climate in Germany, Thursday

• US GDP, initial unemployment claims, durable goods, Thursday

• US Personal Income, PCE, University of Michigan Consumer Sentiment, Friday

Some of the main movements in the markets:

Actions

• S&P 500 futures were down 0.2% at 6:31 a.m. London time

• Japan’s Topix rose 0.3%

• Australia’s S&P/ASX 200 rose 0.5%

• Hong Kong’s Hang Seng fell 0.3%

• The Shanghai Composite fell 0.6%

• Euro Stoxx 50 futures rose 0.1%

• Nasdaq 100 futures fell 0.3%

• Australia’s S&P/ASX 200 rose 0.5%

Coins

• The Bloomberg Dollar Spot index was little changed

• The euro was little changed at $1.0889

• The Japanese yen rose 0.4% to 156.42 per dollar

• The offshore yuan was little changed at 7.2890 per dollar

• The Australian dollar fell 0.2% to $0.6631

• The British pound was little changed at $1.2928

Cryptocurrencies

• Bitcoin fell 2.4% to $66,525.6

• Ether fell 1.6% to $3,435.4

Titles

• The 10-year Treasury yield fell one basis point to 4.24%

• Japan’s 10-year yield remained unchanged at 1.060%

• Australia’s 10-year yield rose three basis points to 4.34%

goods

• West Texas Intermediate crude oil was little changed

• Spot gold fell 0.1% to $2,393.73 an ounce

This story was produced with help from Bloomberg Automation.

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