Asia Stocks Rise on Tech, Traders Await China Meet: Markets Wrap

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(Bloomberg) -- Stocks in Asia broadly advanced on rallies in some of the world’s largest technology companies during a week that includes Federal Reserve boss Jerome Powell’s congressional testimony and China’s National People’s Congress. Most Read from Bloomberg Technology shares were the biggest gainers in Asia, with Taiwan Semiconductor Manufacturing Co. rising as much as 6.2% and SK Hynix Inc. climbing 5%. The blue-chip gauge Nikkei-225 Stock Average in Japan also surpassed 40,000 for the first time while South Korea’s Kospi index rose as much as 1.5%. Their advances followed the strong rallies in US peers on Friday. “The Nikkei 225’s 40,000 is certainly a key psychological level, which could offer some resistance for the index and bring volatility,” said Charu Chanana, strategist at Saxo Capital Markets based 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.” Chinese stocks edged lower as the nation’s equities and the yuan are in focus ahead of the 14th National People’s Congress, an annual parliamentary gathering in Beijing, that will begin Tuesday as markets await more stimulus measures to aid a soft economy. A cut to key mortgage rates and encouraging state funds to buy shares have done little to spur confidence as policy makers battle a property crisis, stubborn deflation and angry retail investors caught in a $7 trillion stock rout. 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. Story continues Treasury yields edged higher in Asian trading after the rate on the policy sensitive two-year fell nine basis points Friday following weaker than expected activity data and cautious comments from Fed officials. The dollar traded in tight ranges against its Group-of-10 peers, while the South Korean won strengthened to the highest level in a week amid improving exports. 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 as 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 don’t expect the chair to stray very far from the Fed’s recent messaging — officials are in a “wait-and-see” mode as there’s still a lot of ambiguity in the data,” John Briggs, global head of desk strategy at NatWest Markets wrote in a note. Government bond yields “have pushed toward their highs of recent ranges, and we think further large corrections towards higher yields is a lot less likely from here.” 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 when 2024 began. Bank of America ratcheted up its forecast for the S&P 500 to 5,400 by year-end amid a surprising profit margin resilience, Savita Subramanian wrote in a note to clients. Elsewhere this week, traders 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 were little changed as of 11:31 a.m. Tokyo time Nikkei 225 futures (OSE) rose 0.5% Japan’s Topix rose 0.2% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng fell 0.2% The Shanghai Composite fell 0.2% Euro Stoxx 50 futures rose 0.2% Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.0844 The Japanese yen was little changed at 150.16 per dollar The offshore yuan was little changed at 7.2109 per dollar The Australian dollar was little changed at $0.6522 Cryptocurrencies Bitcoin rose 1.2% to $63,640.49 Ether rose 0.3% to $3,489.35 Bonds The yield on 10-year Treasuries advanced one basis point to 4.19% Japan’s 10-year yield was unchanged at 0.710% Australia’s 10-year yield declined five basis points to 4.09% Commodities West Texas Intermediate crude was little changed Spot gold was little changed This story was produced with the assistance of Bloomberg Automation. --With assistance from Aya Wagatsuma and Winnie Hsu. 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