(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.
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Benchmark indexes were up in Australia and Japan, and US futures advanced slightly. With earnings reports poised to drive US sentiment this week, the S&P 500 rose almost 1%, 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.
Asian investors will be on the watch for further stimulus from the Chinese government after the country’s stocks posted their biggest gain in a week on Monday, suggesting that investors are hopeful the government will deliver on its promise of more fiscal support.
“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.”
Oil dropped almost 3% in early trading 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.
The S&P 500 hovered near 5,860 on Monday amid thin trading volume, with futures little changed early Tuesday. The Nasdaq 100 added 0.8%. The Dow Jones Industrial Average climbed 0.5%. 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.
Treauries were little changed after cash trading was closed for a US holiday on Monday. The yen ticked higher versus the dollar, though remained not far from the 150 level.
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.
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.
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.
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.
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.
Easing rates pressure was seen in a surge in debt underwriting, mortgage applications and refinancing activity, as well as signs of a bottom in manufacturing, the BofA team including Ohsung Kwon and Savita Subramanian said.
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.
Marcelli maintains 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.”
Key events this week:
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Eurozone industrial production, Tuesday
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Goldman Sachs, Bank of America, Citigroup earnings, Tuesday
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Fed’s Mary Daly, Adriana Kugler speak, Tuesday
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Morgan Stanley earnings, Wednesday
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ECB rate decision, Thursday
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US retail sales, jobless claims, industrial production, Thursday
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Fed’s Austan Goolsbee speaks, Thursday
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China GDP, Friday
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Fed’s Christopher Waller, Neel Kashkari speak, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 9:08 a.m. Tokyo time
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Japan’s Topix rose 1.1%
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Australia’s S&P/ASX 200 rose 0.7%
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Euro Stoxx 50 futures rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0906
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The Japanese yen was little changed at 149.68 per dollar
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The offshore yuan was little changed at 7.0930 per dollar
Cryptocurrencies
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Bitcoin rose 0.2% to $66,031.57
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Ether rose 0.3% to $2,628.55
Bonds
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The yield on 10-year Treasuries was little changed at 4.10%
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Japan’s 10-year yield declined one basis point to 0.945%
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Australia’s 10-year yield declined two basis points to 4.25%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Shery Ahn.
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