By Alden Bentley
(Reuters) – A look at the day ahead in Asian markets.
While Chinese stocks weren’t quite sure how to react to Beijing’s stimulus update over the weekend, Wall Street extended its breakneck rally to give Tokyo something to close on when it reopens on Tuesday after a three-day weekend.
While the US Treasury market and US government offices were closed on Monday for the US holiday Columbus Day, the Dow Jones and Dow posted high closing numbers, led by chip stocks and high expectations for the third quarter earnings season, which kicked off in earnest on Friday with figures from JP Morgan and Wells Fargo.
On Tuesday, other major money center banks, including Citi, Bank of America and Goldman Sachs, report quarterly results.
The profit later this week American Express (NYSE:), Netflix (NASDAQ:), United Airlines and Procter & Gamble (NYSE:) will show some resilience in consumer spending, which dominates U.S. economic activity, ahead of the Oct. 17 retail sales data release, the key indicator for US investors this week.
Yields reached their highest level since mid-August in holiday-thinned trading, buoyed by belief that the Fed would opt for a smaller rate cut next month as the economy continues to grow and create jobs without overheating.
The dollar may have been the only safe haven to benefit from China’s “Joint Sword 2024B” war games around Taiwan, which the Pentagon on Monday called “destabilizing.” Gold and crude oil fell.
The US interest rate futures market has priced in an 87% chance that the Fed will ease by 25 basis points at its November meeting, and a 13% chance that the Fed will pause and leave the Fed Funds rate at the target range between 4.75% and 5% will remain where it has been since last month’s excessive 50 basis point cut.
The dollar also rose after investors found that Chinese announcements over the weekend that it would raise debt to revive the economy lacked detail.
The yuan ended the day at a low of 7.09 per dollar, also the lowest since September 19. The yuan has fallen about 1% against the dollar since September 24, when the People’s Bank of China kicked off China’s most aggressive stimulus measures since the 24th century. pandemic.
The dollar closed at 150 yen and finished about half a percent higher on Monday, while the Japanese currency continued to fall.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.02% lower late on Monday, with trading in Asia thinned by the Japanese holiday and a weaker close offset by rallies in the CSI300 blue-chip index and .
Numerous U.S. listed shares of Chinese companies fell on Monday, including ADRs Alibaba.com (NYSE:), PDD Holdings, NIO and Baidu (NASDAQ:).
The S&P 500 ultimately gained 0.77%, the Dow Jones rose 0.47% and the Nasdaq 0.87%, while the Philadelphia Semiconductor Index rose almost 2%.
Shares of Nvidia (NASDAQ:) closed at record highs, putting the heavyweight AI chipmaker on the verge of dethroning Apple (NASDAQ:) as the world’s most valuable company.
All that leaves positive signs, albeit not uniformly, for Tokyo to keep the party going, surpassing Friday’s two-week high and continuing its already 27% gain since early August’s low.
Here are the key developments that could give more direction to the markets on Tuesday:
– Industrial production in Japan (Aug.)
– Unemployment in South Korea (September)
– Citi, Bank of America and Goldman Sachs report third quarter results
