Most Asian equity indices surged as the positive momentum from a rebound in US stocks spilled over into after-hours trading, fueled by impressive earnings reports from major tech companies. Australian and Japanese markets saw significant gains, while Greater China shares experienced mixed performance. Korean stocks surged by over 2%, on track for their most substantial weekly gain since 2022. Additionally, futures for US equities climbed, mirroring the uptrend seen in the S&P 500 Index and the Nasdaq 100 Index, both of which rose by over 1% on Thursday.
Manish Bhargava, a fund manager at Straits Investment Holdings in Singapore, attributed the gains in Asian equities to oversold technicals prompting automatic buying, coupled with a positive after-hours surge in US markets. He noted the influence of algorithmic traders reacting to technical signals, further amplified by short covering activities.
In Korea, banks, automakers, and hardware tech firms drove gains on the Kospi Index, fueled by expectations of regulatory measures that could enhance valuations. The nation’s finance minister’s commitment to improving shareholder returns and corporate governance earlier in the week contributed to investor optimism.
However, Japan’s Aozora Bank Ltd. faced significant losses, plummeting by as much as 19% over two days after announcing its first loss in 15 years due to soured debt linked to the US commercial property market.
In Asian trading, Treasury yields remained steady following a decline on Thursday, while the dollar index slipped. The Australian dollar outperformed its Group-of-10 peers.
Market attention shifted to the forthcoming US nonfarm payrolls data, expected to reflect a slowdown in new job additions. Thursday’s data on jobless claims hinted at a softening in the labor market.
Global stocks are poised for a second consecutive week of gains amid speculation that the Federal Reserve will implement interest rate cuts in the coming months. Chinese authorities’ commitment to sustaining government spending has further bolstered market sentiment.
Anitza Nip, head of Asia fixed income research at Union Bancaire Privee, emphasized the Fed’s signals indicating a peak in rates and forthcoming cuts, with expectations of a rate cut beginning in May or June and possibly four cuts throughout the year.
The rally in Treasuries and increased demand for gold reflect concerns over US regional banks. The US regional financials index is on track for its worst week since May last year, coinciding with Citizens Financial Group Inc.’s CEO remarking on past issues that led to the collapse of several lenders.
In corporate news, Japanese banking giant Mizuho Financial Group is expected to report a decline in third-quarter net income. In India, financial tech giant Paytm witnessed a 20% decline, following a similar drop on Thursday, after a downgrade by JPMorgan due to regulatory restrictions.
In US markets, Meta Platforms Inc. and Amazon.com Inc. saw post-market surges on strong earnings reports, overshadowing Apple Inc.’s decline despite overall sales growth.
The rebound in US stocks on Thursday marked a turnaround from the previous session’s losses, which followed the Federal Reserve’s resistance to the idea of a March rate cut.
Oil prices stabilized after a two-day decline, amid reports of progressing negotiations for a ceasefire in the Israel-Hamas conflict and the release of civilian hostages.
Key Market Movements:
Stocks:
- S&P 500 futures rose 0.5%
- Nikkei 225 futures rose 0.9%
- Australia’s S&P/ASX 200 rose 1.3%
- Hang Seng rose 0.6%
- Shanghai Composite fell 0.7%
- Euro Stoxx 50 futures rose 0.9%
Currencies:
- Bloomberg Dollar Spot Index was little changed
- Euro was little changed
- Japanese yen was little changed
- Offshore yuan was little changed
- Australian dollar rose 0.4%
Cryptocurrencies:
- Bitcoin fell 0.2%
- Ether fell 0.1%
Bonds:
- Yield on 10-year Treasuries advanced one basis point
- Japan’s 10-year yield declined 1.5 basis points
- Australia’s 10-year yield declined three basis points
Commodities:
- West Texas Intermediate crude rose 0.4%
- Spot gold was little changed
