Month: April 2024

Investing.com– Most Asian stocks rose on Monday as technology shares tracked strong gains in their Wall Street peers, while Chinese markets advanced after the government further loosened some restrictions on the property market.

Regional markets looked past fears of higher-for-longer U.S. rates following strong inflation data released last week. But said fears are expected to ramp up as a Federal Reserve meeting draws closer this week. 

Tech was the best performer for the day, tracking a strong session on Wall Street on Friday following blowout earnings from Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOGL). U.S. stock index futures rose in Asian trade on Monday.

Strength in tech also helped markets look past data showing sticky U.S. inflation, which sets up the prospect of more hawkish signals from a Federal Reserve meeting later this week. 

Anticipation of the meeting is expected to limit gains in Asian markets.

Chinese stocks rise on property cheer, PMIs awaited 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 1.3% and 0.8%, respectively, outperforming most of their regional peers. 

Gains were driven chiefly by property stocks, after the Chinese government announced measures to further loosen home purchase restrictions across major cities. 

The move was aimed at bolstering the property market, which is grappling with a three-year slump and has been a key pressure point for the Chinese economy. 

Gains in Chinese stocks also came just days before key purchasing managers index data for April, which is expected to offer more cues on an economic recovery in the country. 

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A string of key Chinese company earnings are also on tap this week, particularly from China’s biggest state-owned banks and oil and gas firms. 

Hong Kong’s Hang Seng was the best performer in Asia, rising 1.7% on gains in technology and property stocks. The index was now trading 20% above five-year lows hit in late January, and was close to entering bull market territory.  

Tech boosted by AI hopes

Other Asian tech-heavy indexes also advanced. South Korea’s KOSPI added 0.8% on gains in heavyweight chipmaking stocks. 

Gains in chipmakers also saw Taiwan’s Taiwan Weighted index add over 1%. 

Sentiment towards tech was boosted chiefly by stronger-than-expected earnings from U.S. tech titans Microsoft and Alphabet, which triggered a rally on Wall Street on Friday.

Strong earnings from the two spurred hopes that increased demand for artificial intelligence will continue to generate value for tech stocks. 

Other Asian stocks also advanced on Monday. Broad-based gains lifted Australia’s ASX 200 by 0.8%, while futures for India’s Nifty 50 index pointed to a marginally positive open. The Nifty is set for some volatility this week with the 2024 general elections.

Japanese markets were closed for a holiday.

Investing.com– The Japanese yen weakened further on Monday, seeing little relief after middling signals from the Bank of Japan and increased expectations of higher-for-longer U.S. interest rates put the currency close to levels last seen in 1986. 

The USDJPY pair- which pegs the number of yen required to buy one dollar, blew past the 160 level on after seeing what analysts described as a “flash crash” on Friday. Weakness in the yen came even with Japanese markets closed for a holiday.

The USDJPY pair rose as much as 1% to a 34-year high of 160.20. It was now close to reaching highs last seen in 1986, when the U.S. had threatened Japan with trade sanctions.

The yen’s decline came after the BOJ did not offer any concrete signals on monetary policy and weakness in the currency market during a meeting on Friday. While the central bank did hike its inflation outlook for the coming years, it also lowered its expectations for economic growth, raising questions over just how much the BOJ could potentially tighten monetary policy this year. 

The BOJ had hiked rates for the first time in 17 years in March, citing an expected increase in inflation on the back of bumper wage hikes this year. But the move provided fleeting support to the yen. 

Substantially softer-than-expected inflation data from Tokyo, which acts as a bellwether for Japan, also raised more questions over the BOJ’s forecast for higher inflation. Data on Friday showed inflation fell below the central bank’s 2% annual target rate in April.

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But in addition to negative domestic signals,  the biggest point of pressure on the yen was persistent concerns over a wide gulf between U.S. and Japanese interest rates. 

U.S. PCE price index data- which is the Federal Reserve’s preferred inflation gauge- read hotter than expected for March, adding to bets that the central bank will be in no hurry to begin cutting interest rates. 

The dollar shot up after the PCE data, also pressuring the yen.

The Fed is widely expected to keep rates on hold during a meeting later this week, and is also expected to present a hawkish outlook. The central bank is expected to only begin trimming rates by September, or the fourth quarter. 

The USDJPY pair effectively blew past levels that traders believed would attract currency market intervention by the government. 155 was considered as the threshold until which the government would allow the yen to weaken, but this did not prove to be the case. 

While Japanese officials have continued to offer verbal warnings, a lack of action on their end potentially signals limited resources to completely stem weakness in the yen. 

A weaker yen also benefits Japan’s economy, which is heavily reliant on exports.

Investing.com– Most Asian currencies moved little on Monday as markets turned cautious before a Federal Reserve meeting this week, while the Japanese yen rebounded after sinking to new 34-year lows earlier in the day. 

The dollar retreated slightly amid pressure from a yen recovery, although it still retained a bulk of its gains through April. Signs of sticky U.S. inflation saw markets steadily price out expectations of early rate cuts by the Fed, which boosted the dollar. 

Japanese yen rebounds, USDJPY tumbles from 160

The USDJPY pair- which gauges the amount of yen required to buy one dollar- sank 1.8% to 155.48, after rising as high as 160.20 earlier in the day.

The reason for the pair’s decline was not immediately clear, although it could be potentially linked to government intervention. Japanese markets were closed for a holiday.

The yen had weakened sharply against the dollar in recent sessions, with the USDJPY pair blowing past levels that had attracted intervention in the past. This came following weak Japanese inflation data and middling signals from the Bank of Japan, while fears of higher-for-longer U.S. rates also weighed. 

But while the yen marked a strong rebound on Monday, the scope for more gains in the currency remained limited, especially ahead of a Fed meeting this week. 

Dollar weakens amid yen strength, Fed awaited 

The dollar index and dollar index futures fell 0.2% and 0.3%, respectively, after rising sharply on Friday. 

The greenback was sitting on strong gains for April after traders largely priced out most expectations of early rate cuts by the Fed. 

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These bets came to a head on Friday after PCE price index data- the Fed’s preferred inflation gauge- read hotter than expected for March. 

Focus this week is now squarely on a Fed meeting. The central bank is expected to keep rates steady and potentially offer a hawkish outlook, given recent stickiness in U.S. inflation.

The prospect of higher-for-longer rates bodes poorly for Asian markets- a notion that kept most regional currencies to a tight range on Monday. 

The Chinese yuan’s USDCNY pair fell slightly, as did the Indian rupee’s USDINR pair. Traders were wary of any volatility in the rupee as the Indian 2024 general elections began.

The Australian dollar was an outlier among its peers, with the AUDUSD pair rising 0.8% on speculation that a hotter-than-expected first-quarter inflation reading will attract more interest rate hikes from the Reserve Bank of Australia. 

The South Korean won’s USDKRW pair moved little, as did the Singapore dollar’s USDSGD pair.

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Investing.com — Stock futures in New York tick higher to begin a new trading week, with markets preparing for a major Federal Reserve monetary policy announcement. More megacap corporate results are also due out in the coming days, including earnings from Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). Elsewhere, Tesla (NASDAQ:TSLA) strikes a deal with Baidu (NASDAQ:BIDU) to implement its advanced full self-driving features in China through the internet giant’s mapping and navigation functions, according to a Bloomberg News report.

1. U.S. futures point higher

U.S. stock futures edged higher on Monday as traders geared up for a key Federal Reserve interest rate decision and a fresh batch of corporate results this week.

By 03:25 ET (07:25 GMT), the Dow futures contract had inched higher by 59 points or 0.2%, S&P 500 futures had gained 10 points or 0.2%, and Nasdaq 100 futures had increased by 47 points or 0.3%.

The main indices closed in the green at the end of the prior session, lifted by upbeat quarterly results from Google-owner Alphabet (NASDAQ:GOOGL) and software group Microsoft (NASDAQ:MSFT) that spurred a rise in megacap tech stocks. The benchmark S&P 500 and the tech-heavy Nasdaq Composite both posted their largest weekly percentage gains since November 2023 and snapped multi-week losing streaks.

New data showing that U.S. inflation accelerated slightly in March on a year-on-year basis also bolstered hopes that the Fed could roll out a rate reduction as soon as September and soothed some worries over stagflation in the world’s biggest economy.

2. Fed rate decision ahead

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The major economic event of the week is due to take place on Wednesday, when the Fed is scheduled to release its latest rate announcement.

Markets do not expect the U.S. central bank to alter borrowing costs from a more than two-decade high range of 5.25% to 5.50%, meaning that particular attention will be placed on comments from Fed Chair Jerome Powell. In April, Powell flagged that recent data points have “not given us greater confidence” that inflation is sustainably being cooled down to the Fed’s 2% target level, adding that “it’s likely to take longer than expected to achieve that confidence.”

Officials remain wary of slashing rates too soon because of signs of persistently elevated prices, resilience in the labor market and overall strong activity in the U.S. economy. Many traders are subsequently betting that the Fed’s much-anticipated first cut, which some thought would come this spring, will now not come until September, according to CME Group’s (NASDAQ:CME) closely-watched FedWatch Tool.

But, as analysts at ING warned in a note to clients last week, “the risk remains that the Fed ends up bringing interest rates to a more neutral level more slowly and over a longer period” than forecasts predict.

3. Amazon, Apple highlight weekly earnings parade

E-commerce titan Amazon and iPhone-maker Apple are set to headline this week’s raft of corporate results.

For Amazon, which reports after the closing bell on Tuesday, investors will be keen to see if the company’s ongoing effort to scale back costs are continuing to boost profits. The push to slash expenses, as well as strong consumer demand during the holiday shopping season, helped margins at its huge North American operations improve in the prior quarter.

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Apple will unveil their earnings after the close on Thursday, with traders likely to train their gazes on faltering shipments of the California-based firm’s flagship iPhone handset device and the ability of its Services division to help offset this weakness.

Analysts also expect artificial intelligence to be in the limelight for both these companies, particularly after megacap peers like Alphabet, Microsoft and Facebook-parent Meta Platforms (NASDAQ:META) recently offered more details on their plans to spend big on integrating the nascent technology.

4. Tesla to partner with Baidu for self-driving rollout in China – Bloomberg

Tesla struck a deal with Baidu to implement its advanced full self-driving (FSD) features in China through the internet giant’s mapping and navigation functions, Bloomberg reported on Monday.

The world’s biggest electric vehicle maker plans to deploy its FSD services — which Chief Executive Elon Musk has touted as a major focus point — using lane-level navigation and mapping provided by Baidu, the report said.

The report comes just a week after Baidu said that Tesla vehicles will integrate Baidu maps next month. Musk visited China over the weekend.

Partnering with Baidu allows Tesla to clear a major regulatory hurdle in gaining access to data collection on China’s public roads, now allowing it to potentially offer FSD technology in the country.

5. Oil prices dip

Oil prices fell sharply Monday as peace talks between Israel and Hamas eased concerns of a wider conflict in the Middle East, as well as the potential for a disruption to supplies from the vital region.

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By 03:26 ET, the U.S. crude futures traded 1.0% lower at $83.05 a barrel, while the Brent contract dropped 0.9% to $87.39 per barrel.

A Hamas delegation will visit Cairo on Monday for talks aimed at securing a ceasefire, a Hamas official told Reuters on Sunday, with the group expected to respond to Israel’s latest Gaza phased truce proposal delivered on Saturday.