The MSCI AC Asia Pacific Index is on track for its longest run of gains since May, driven by robust performance in several key markets. Japanese stocks advanced, with major indices nearing their all-time highs, and shares of SoftBank Group Corp. exceeded their lifetime closing peak for the first time in three years, fueled by a global upswing in AI and semiconductor investments. Singaporean equities also stood out, bolstered by strong banking sector performance.
In the United States, S&P 500 futures dipped slightly after the index surpassed 5,500 for the first time, marking its 32nd record close this year. Tesla Inc. soared 10%, leading gains among large-cap stocks and propelling the Nasdaq 100 past the 20,000 threshold for the first time.
Chris Weston, head of research at Pepperstone Group in Melbourne, remarked that the new highs in the S&P 500 and Nasdaq are psychologically significant. “Asia will draw inspiration not only from the overall gains in US markets but also from the broad-based participation that extended beyond tech stocks,” he noted.
Elsewhere, Australia saw a rise in its three-year bond yield following unexpectedly strong retail sales data, which reinforced the likelihood of a rate hike.
Investors are now focused on upcoming US initial jobless claims and ADP employment data due on Wednesday, seeking further insights into the Federal Reserve’s policy direction. Fed Chair Jerome Powell recently stated that significant progress has been made in curbing inflation but emphasized the need for more evidence before considering interest rate cuts.
In China, a private survey indicated that service sector growth slowed to an eight-month low in June, raising concerns about the economic outlook. While Hong Kong stocks gained, mainland Chinese shares declined.
US equities have continued to defy pessimistic predictions, buoyed by solid corporate earnings, enthusiasm for AI, and expectations of declining interest rates. Since a low point in October 2022, the S&P 500 has gained over $16 trillion in value, with the absence of significant pullbacks reinforcing bullish sentiment.
Economic data released on Tuesday showed an unexpected increase in US job openings, disrupting a trend that suggested a cooling labor market, which is seen as critical for potential Fed easing.
As the US market prepares for an early close on Wednesday ahead of the July 4 holiday, investors are also anticipating the crucial US payrolls report due Friday. Economists predict that employers added approximately 190,000 jobs in June, with the unemployment rate expected to remain at 4%.
In other markets, oil prices neared a two-month high, while the Bloomberg Dollar Spot Index and Treasury yields remained relatively unchanged.
