Asian Stocks Rise Tracking US Gains; Oil Declines: Markets Wrap

(Bloomberg) -- Shares in Asia climbed after another strong performance on Wall Street, with stocks hitting fresh record highs. Oil dropped as concerns eased about Israel attacking Iranian energy facilities.

MSCI’s Asia Pacific Index rose as much as 0.6% as benchmarks in Australia, Japan and Taiwan gained. However, shares in China and Hong Kong dropped, with investors on the watch for further stimulus from the Chinese government. 

“I think it’s very important that we get the two components of stimulus together, the monetary stimulus and the fiscal stimulus, and we’re getting both.” said Kristina Hooper, chief global market strategist at Invesco, on Bloomberg Television. “The fiscal stimulus is going to address key areas that I think will lead to improvements that benefit the economy and markets over the medium and longer term.” 

China may raise 6 trillion yuan ($846 billion) from ultra-long special government bonds over three years as part of its efforts to boost the sputtering economy, Chinese media outlet Caixin reported.

The country has begun enforcing a long-overlooked tax on overseas investment gains by the country’s ultra-rich, according to people familiar with the matter. The move underscores growing urgency within the government to expand its sources of revenue as land sales tumble and growth slows.

Still, there are more signs of economic weakness as a report Monday showed export growth in September unexpectedly climbed just 2.4% in dollar terms from a year earlier to the lowest level since May. A gauge of US-listed Chinese shares fell more than 2% overnight. 

“The fundamentals need to see this tailwind from policy to kick the economy going again,” said Steve Brice, Standard Chartered Wealth Solutions Group CIO, on Bloomberg Television.

Oil dropped after the Washington Post reported that Israel doesn’t plan on striking Iranian oil or nuclear facilities. That extended losses from Monday after China’s highly anticipated Finance Ministry weekend briefing lacked specific new incentives to boost consumption in the world’s biggest crude importer. Shares of Asian energy producers fell. 

Meanwhile, in a show of hot demand for Japan’s biggest listing in six years, Tokyo Metro Co.’s initial public offering has raised ¥348.6 billion ($2.3 billion) after the company priced shares at the top of the marketed range, people familiar with the matter said.

Markets are also anticipating Hong Kong leader John Lee’s annual speech on Wednesday, when he is expected to make bolstering the economy a priority and lay out an agenda that includes a potential cut to a liquor tax and possible measures to strengthen the city’s status as a finance center.

With earnings reports poised to drive US sentiment this week, the S&P 500 gained almost 1% on Monday, notching another record — its 46th this year. That’s a hint investors are not deterred by the reduced forecasts for third-quarter results and are instead betting on positive surprises.

The Nasdaq 100 added 0.8%. Nvidia Corp. led gains in megacaps, Apple Inc. gained on a bullish analyst call and Tesla Inc. rebounded after last week’s plunge. Goldman Sachs Group Inc. and Citigroup Inc. advanced ahead of results.

Treasury yields slightly ticked lower on Tuesday after cash trading was closed for a US holiday on Monday. The yen ticked higher versus the dollar, though remained not far from 150, a key psychological level. 

In the US, earnings season unofficially kicked off on Friday, led by financial bellwethers JPMorgan Chase & Co. and Wells Fargo & Co. On top of other big banks reporting this week, traders will be paying close attention to results from key companies like Netflix Inc. and JB Hunt Transport Services Inc.

An initial round of third-quarter financial results last week showed Corporate America is benefitting from lower rates early into the Federal Reserve’s easing cycle, according to Bank of America Corp. strategists including Ohsung Kwon and Savita Subramanian.

Strategists are predicting S&P 500 firms will post their weakest results in the past four quarters, with just a 4.3% increase compared with a year ago, Bloomberg Intelligence data show. Meantime, corporate guidance implies a jump of about 16%. That solid outlook suggests companies could easily beat market expectations.

To Solita Marcelli at UBS Global Wealth Management, third-quarter results should confirm that large-cap corporate profit growth is solid against a resilient macro backdrop. She maintained a “positive outlook for US equities,” reiterated her S&P 500 price target of 6,200 by June 2025, and continues to like “AI beneficiaries and quality stocks.”

In other news, Biden administration officials have discussed capping sales of advanced AI chips from Nvidia Corp. and other American companies on a country-specific basis, people familiar with the matter said, a move that would limit some nations’ artificial intelligence capabilities.

Bitcoin steadied after rising 5% on Monday, buoyed by growing indications that the US regulatory outlook for the cryptocurrency sector will improve after the upcoming presidential election. 

Key events this week:

Some of the main moves in markets: 

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Shery Ahn and Jason Scott.

©2024 Bloomberg L.P.