(Bloomberg) -- A rally in technology shares drove European futures and Asian stocks higher ahead of events this week that include Federal Reserve Chair Jerome Powell’s congressional testimony and China’s National People’s Congress.
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Euro Stoxx 50 futures pointed to gains at the open, following a strong performance in US markets on Friday. The S&P 500 hit its 15th record this year, while the Nasdaq 100 climbed almost 1.5%.
The renewed tech rally reverberated in Asia as the world’s top chipmaker Taiwan Semiconductor Manufacturing Co. rose to its highest-ever level. Meanwhile, Japan’s blue-chip gauge Nikkei-225 Stock Average surpassed 40,000 for the first time.
The breach “is certainly a key psychological level, which could offer some resistance for the index and bring volatility,” said Charu Chanana, a strategist at Saxo Capital Markets in Singapore. “But when structural factors remain in favor, and yen weakness continues, it is likely to be more a bullish signal rather than fueling any concerns of Japanese stocks being overbought.”
Elsewhere, Chinese stocks fluctuated ahead of the 14th National People’s Congress, an annual parliamentary gathering in Beijing that will begin Tuesday. Most healthcare stocks jumped in anticipation of more stimulus measures from the congress to aid a soft economy.
“We still think this year earnings growth will be decent. We’re looking for about 8%-10% earnings growth,” Kinger Lau, a strategist at Goldman Sachs Group Inc., said on China stocks on Bloomberg Television. Combined with current low valuations and potential policy support coming from the NPC, “we think we have a pretty good setup for the market to do better in the next 10-12 months.”
Oil steadied near the highest level this year after OPEC+ extended its production cuts to stave off a global crude surplus. US crude traded around $80 a barrel in Asia, holding the level it hit for the first time in almost four months on Friday.
Treasuries fell while Japanese bonds were little changed as traders digested a report that the government is discussing officially stating an end to deflation. The dollar traded in tight ranges against its Group-of-10 peers.
In credit, Adani Group began marketing it first dollar bond since a report by short seller Hindenburg Research in an attempt to rebuild investor confidence.
Powell’s Testimony
The rally in US markets will likely hinge on jobs data and Powell’s testimony this week. Bets for the start of the Fed’s easing cycle were refined amid recent data indicating a resilient US economy. Swaps traders now see the first cut in July, compared with the May estimate they were pricing at the beginning of last month, according to data compiled by Bloomberg.
“We should expect Powell to reiterate patience and emphasize on no hurry to cut rates,” Frances Cheung and Christopher Wong, strategists at Oversea-Chinese Banking Corp., wrote in a note. “These are known knowns and shouldn’t affect markets too much unless Powell signals more forceful pushbacks, that could lead to further hawkish repricing.”
The stock rally is showing little signs of slowing as US corporate earnings grew nearly 8% in the fourth quarter, helping offset macroeconomic uncertainty. Meantime, the frenzy around artificial-intelligence has blindsided Wall Street forecasters, spurring a race among strategists to keep up with a stock market rally that’s already blowing past their expectations.
Bitcoin briefly breached the $64,000 level as it gained for the second day. Traders are betting the cryptocurrency will soon surpass the record price of almost $69,000, which was reached during the Covid pandemic.
Traders this week will be keeping an eye on Tokyo inflation, Australian growth data and a policy decision from the European Central Bank. The so-called Super Tuesday Republican and Democratic party primary votes, US jobs data and earnings from US consumer discretionary stocks are also due.
Key events this week:
ECB Governing Council member Robert Holzmann speaks, Monday
Fed’s Patrick Harker speaks, Monday
Japan’s Tokyo CPI, Tuesday
BOJ Governor Kazuo Ueda speaks, Tuesday
China Caixin services PMI, Tuesday
China kicks off its 14th National People’s Congress, Tuesday
Eurozone S&P Global Services PMI, PPI, Tuesday
US factory orders, ISM services, S&P Global Services PMI, Tuesday
More than a dozen US states hold Republican and Democratic primaries, Tuesday
Australia GDP, Wednesday
UK Chancellor Jeremy Hunt unveils annual budget, Wednesday
Eurozone retail sales, Wednesday
Fed Chair Jerome Powell testifies before House committee, Wednesday
Fed issues Beige Book survey of regional economic conditions, Wednesday
Fed’s Neel Kashkari, Mary Daly speak, Wednesday
China trade, forex reserves, Thursday
BOJ board member Junko Nakagawa speaks, Thursday
ECB rate decision, Thursday
US initial jobless claims, trade, Thursday
Fed Chair Jerome Powell testifies before Senate committee, Thursday
Fed’s Loretta Mester speaks, Thursday
US President Joe Biden delivers the State of the Union address, Thursday
Eurozone GDP, Friday
US nonfarm payrolls, unemployment, Friday
Fed’s John Williams speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 3:45 p.m. Tokyo time
S&P/ASX 200 futures were little changed
Hong Kong’s Hang Seng fell 0.4%
The Shanghai Composite rose 0.4%
Euro Stoxx 50 futures rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0845
The Japanese yen fell 0.2% to 150.38 per dollar
The offshore yuan was little changed at 7.2102 per dollar
The Australian dollar was little changed at $0.6522
The British pound was little changed at $1.2664
Cryptocurrencies
Bitcoin rose 1.1% to $63,572.95
Ether fell 0.3% to $3,469.28
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.21%
Japan’s 10-year yield was unchanged at 0.710%
Australia’s 10-year yield declined four basis points to 4.10%
Commodities
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Aya Wagatsuma and Winnie Hsu.
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2024-03-04 05:46:12Z
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