Asian markets experienced an uptick following another record-setting day on Wall Street, primarily driven by technology stocks. The MSCI Asia Pacific Index advanced by as much as 0.7%, buoyed by strong performances in the semiconductor sector. Japan’s Nikkei 225 Stock Average Index rebounded, reaching levels not seen since July, while equity benchmarks in Australia and Taiwan also recorded gains.
Oil prices declined after reports from the Washington Post indicated that Israel has no intentions of targeting Iranian oil or nuclear facilities, easing previous concerns over geopolitical tensions.
However, shares in China and Hong Kong faced downward pressure, with investors closely monitoring for additional stimulus measures from the Chinese government. Despite a rise in equity benchmarks in the region on Monday, market optimism was tempered as a key briefing from the Finance Ministry failed to announce specific new initiatives aimed at enhancing consumption in the world’s largest crude importer.
Kristina Hooper, Chief Global Market Strategist at Invesco, emphasized the importance of a coordinated stimulus approach in a Bloomberg Television interview. “It’s critical that we integrate monetary and fiscal stimulus, and we’re seeing movement on both fronts. The fiscal measures will target key sectors, potentially fostering improvements that will benefit the economy and markets in the medium to long term.”
According to Chinese media outlet Caixin, the government may raise approximately 6 trillion yuan ($846 billion) through ultra-long special government bonds over three years as part of its strategy to invigorate the sluggish economy.
Additionally, the government has started enforcing a long-overdue tax on capital gains from overseas investments for the ultra-wealthy, reflecting increasing urgency to diversify revenue sources amid declining land sales and slowing growth.
Economic indicators continue to raise concerns, with a report revealing that China’s export growth in September unexpectedly increased by just 2.4% year-on-year in dollar terms, marking the lowest growth rate since May. Consequently, a gauge of US-listed Chinese shares fell over 2% overnight.
“The fundamentals need supportive policies to stimulate the economy effectively,” noted Steve Brice, CIO of Standard Chartered Wealth Solutions Group, in a Bloomberg interview.
In other developments, Tokyo Metro Co.’s initial public offering (IPO), the largest in Japan in six years, raised ¥348.6 billion ($2.3 billion) after successfully pricing shares at the upper end of the marketed range, demonstrating strong investor interest.
Looking ahead, the markets are anticipating Hong Kong leader John Lee’s annual address on Wednesday, where he is expected to prioritize economic revitalization, potentially proposing a cut to the liquor tax and measures to enhance the city’s status as a financial hub.
As earnings reports are set to influence US market sentiment this week, the S&P 500 gained nearly 1% on Monday, achieving its 46th record this year. Investor confidence remains robust despite lower third-quarter earnings forecasts, with expectations for positive surprises. Japanese stocks mirrored this trend, advancing alongside their US counterparts.
Naoki Fujiwara, a senior fund manager at Shinkin Asset Management Co., stated, “Given the current circumstances in the US and China, there are no significant selling pressures in the macro environment, and Japanese stocks remain undervalued.”
The Nasdaq 100 also rose by 0.8%, with Nvidia Corp. leading gains among mega-cap stocks, alongside positive movements in Apple Inc. and Tesla Inc. ahead of anticipated earnings reports from Goldman Sachs Group Inc. and Citigroup Inc.
Meanwhile, US Treasury yields dipped slightly on Tuesday following the closure of cash trading due to a US holiday on Monday. The Japanese yen strengthened against the dollar, hovering just below the key psychological level of 150.
In the United States, the unofficial kickoff of earnings season began on Friday with reports from major financial institutions, including JPMorgan Chase & Co. and Wells Fargo & Co. Traders are keenly focused on upcoming earnings from other large companies such as Netflix Inc. and JB Hunt Transport Services Inc.
An initial wave of third-quarter results indicated that Corporate America is benefiting from lower rates in the early stages of the Federal Reserve’s easing cycle, according to strategists at Bank of America Corp.
In regulatory news, Biden administration officials are reportedly discussing the possibility of capping sales of advanced AI chips from Nvidia Corp. and other American firms on a country-specific basis, a move that could restrict certain nations’ capabilities in artificial intelligence.
Bitcoin prices stabilized after a 5% surge on Monday, driven by growing optimism regarding improved regulatory prospects for the cryptocurrency sector following the upcoming presidential election.
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