European Stocks Set for Gains as Tech Rally Speads: Markets Wrap

(Bloomberg) — European stock futures pointed to a strong opening, following a tech rally in Asia and new data that revived hopes of lower interest rates in the U.S. United.

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The Euro Stoxx 50 contract rose 0.5%, with US futures also gaining. The gains came after the MSCI Asia-Pacific index saw its biggest rise in a month, with chip-related stocks among the best performers thanks to strength among their U.S. counterparts.

The Australian dollar climbed 0.5% against a broadly weaker greenback after hot inflation figures highlighted persistent local price pressures and strengthened the case for holding rates by the central bank at their highest level in 12 years. The South Korean won led gains among Asian currencies. Treasury bills remained generally stable.

In addition to the strong performance of U.S. tech giants, weak measures of business activity in the world’s largest economy also helped keep forecasts of Federal Reserve policy easing this year in force. As on Wall Street, the focus is also on technology profits in Asia, as the region has entered its busiest week in terms of corporate results.

“We saw a nice rebound on Wall Street ahead of big tech earnings, and that should flow through to Asian equity markets today,” said Matt Simpson, senior market strategist at City Index Inc. “I wouldn’t go so far as to call this a renewed risk appetite at this stage, although there is some relief that the ECB and BOE seem happy to “dissociate” from the Fed.

The S&P 500 recorded its best consecutive rally in two months. Nvidia Corp., a poster child for the artificial intelligence boom, has led a wave of chipmakers. Texas Instruments Inc. gave bullish revenue forecasts – a good sign for the chip industry that could help Asian producers on Wednesday.

Oil held its advance as an industry report showed a decline in U.S. crude inventories and traders tracked progress toward new sanctions on Iran. Gold rose slightly.

Elsewhere, the yen remained inches from the key level of 155 to the dollar as a former top Japanese foreign exchange official warned the country was on the brink of monetary intervention.

In the corporate world, Silchester International Investors revealed that it took a stake in Nikon Corp., sending shares to their highest level in nearly three years. Trading in SenseTime shares was halted after a 36% rise in Hong Kong, following the Chinese technology company’s launch of its improved AI model.

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Earnings under surveillance

In late U.S. hours, Tesla Inc. soared as the electric vehicle giant struck an upbeat tone despite a sales failure, the first of the “Magnificent Seven” megacaps to report. The stock halted its seven-day slide, climbing alongside the rest of the group.

Morgan Stanley’s Mike Wilson said the bar is high for U.S. companies to turn a profit, especially for ultra-large-cap technology companies, which face tough comparisons to the growth that they posted last year.

Besides Tesla, Microsoft Corp., Meta Platforms Inc. and Alphabet Inc. are also expected to report results this week. Profits from the “Magnificent Seven” group – which also includes Apple Inc., Amazon.com Inc. and Nvidia Corp. – are expected to rise about 40% in the first quarter compared to last year, according to Bloomberg Intelligence data.

The tech mega-cap group is crucial to the S&P 500 since the companies have the heaviest weightings in the benchmark index. After this year’s advance, valuations have become high. After the latest selloff, the Magnificent Seven was still trading at a total of 31 times forward earnings, according to data compiled by Bloomberg.

Key events this week:

• Indonesia rate decision on Wednesday

• Results from IBM, Boeing and Meta Platforms, Wednesday

• Malaysia CPI, Thursday

• South Korea’s GDP on Thursday

• Turkey rate decision on Thursday

• US GDP, wholesale stocks, initial jobless claims, Thursday

• Results from Microsoft, Alphabet, Airbus, Caterpillar, Thursday

• Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday

• Personal income and spending in the United States, consumer sentiment from the University of Michigan, Friday

• Exxon Mobil, Chevron results, Friday

Some of the main market movements:

Actions

• S&P 500 futures rose 0.4% as of 6:33 a.m. London time

• The Japanese Topix rose 1.6%

• Australia’s S&P/ASX 200 rose 0.1%

• Hong Kong’s Hang Seng rose 1.9%

• The Shanghai Composite rose 0.3%

• Euro Stoxx 50 futures rose 0.5%

• Nasdaq 100 futures rose 0.7%

• Australia’s S&P/ASX 200 rose 0.1%

Currencies

• Bloomberg Dollar Spot Index little changed

• The euro was little changed at $1.0702

• The Japanese yen was little changed at 154.88 per dollar

• The offshore yuan was little changed at 7.2606 per dollar.

• The Australian dollar rose 0.4% to $0.6515.

• The British pound was little changed at $1.2452

Cryptocurrencies

• Bitcoin rose 0.6% to $66,729.77

• Ether rose 1.4% to $3,254.96

Obligations

• The 10-year Treasury yield rose two basis points to 4.62%

• The Japanese 10-year yield remained unchanged at 0.890%

• The Australian 10-year yield rose 13 basis points to 4.39%

Raw materials

• West Texas Intermediate crude rose 0.2% to $83.53 a barrel

• Spot gold rose 0.2% to $2,327.46 an ounce

This story was produced with the help of Bloomberg Automation.

–With the help of Rita Nazareth and Rob Verdonck.

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