(Bloomberg) — Shares in Asia climbed after another record high on Wall Street fueled by technology shares. Oil dropped as concerns eased about Israel attacking Iranian energy facilities.
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MSCI’s Asia Pacific Index rose as much as 0.7% on the back of gains in the chip sector. Japan’s Nikkei 225 Stock Average Index climbed back up to reach a high last seen in July. Benchmarks in Australia and Taiwan also advanced.
Oil dropped after the Washington Post reported that Israel doesn’t plan on striking Iranian oil or nuclear facilities.
Shares in China and Hong Kong slid, with investors on the watch for further stimulus from the Chinese government. Equity benchmarks in the country had risen on Monday even after a highly anticipated Finance Ministry weekend briefing lacked specific new incentives to boost consumption in the world’s biggest crude importer.
“It’s very important that we get the two components of stimulus together, the monetary stimulus and the fiscal stimulus, and we’re getting both.” said Kristina Hooper, chief global market strategist at Invesco, on Bloomberg Television. “The fiscal stimulus is going to address key areas that I think will lead to improvements that benefit the economy and markets over the medium and longer term.”
China may raise 6 trillion yuan ($846 billion) from ultra-long special government bonds over three years as part of its efforts to boost the sputtering economy, Chinese media outlet Caixin reported.
The country has begun enforcing a long-overlooked tax on overseas investment gains by the country’s ultra-rich, according to people familiar with the matter. The move underscores growing urgency within the government to expand its sources of revenue as land sales tumble and growth slows.
Still, there are more signs of economic weakness as a report Monday showed export growth in September unexpectedly climbed just 2.4% in dollar terms from a year earlier to the lowest level since May. A gauge of US-listed Chinese shares fell more than 2% overnight.
“The fundamentals need to see this tailwind from policy to kick the economy going again,” said Steve Brice, Standard Chartered Wealth Solutions Group CIO, on Bloomberg Television.
Meanwhile, in a show of hot demand for Japan’s biggest listing in six years, Tokyo Metro Co.’s initial public offering has raised ¥348.6 billion ($2.3 billion) after the company priced shares at the top of the marketed range, people familiar with the matter said.
Markets are also anticipating Hong Kong leader John Lee’s annual speech on Wednesday, when he is expected to make bolstering the economy a priority and lay out an agenda that includes a potential cut to a liquor tax and possible measures to strengthen the city’s status as a finance center.
With earnings reports poised to drive US sentiment this week, the S&P 500 gained almost 1% on Monday, notching another record — its 46th this year. That’s a hint investors are not deterred by the reduced forecasts for third-quarter results and are instead betting on positive surprises. Japanese stocks gained on Tuesday following its US peers higher.
“Considering the situation in the US and China, there are no selling factors in the macro environment, and Japanese stocks are undervalued,” said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management Co.
The Nasdaq 100 added 0.8%. Nvidia Corp. led gains in megacaps, Apple Inc. gained on a bullish analyst call and Tesla Inc. rebounded after last week’s plunge. Goldman Sachs Group Inc. and Citigroup Inc. advanced ahead of results.
Treasury yields slightly ticked lower on Tuesday after cash trading was closed for a US holiday on Monday. The yen was higher versus the dollar, though remained not far from 150, a key psychological level.
In the US, earnings season unofficially kicked off on Friday, led by financial bellwethers JPMorgan Chase & Co. and Wells Fargo & Co. On top of other big banks reporting this week, traders will be paying close attention to results from key companies like Netflix Inc. and JB Hunt Transport Services Inc.
An initial round of third-quarter financial results last week showed Corporate America is benefitting from lower rates early into the Federal Reserve’s easing cycle, according to Bank of America Corp. strategists including Ohsung Kwon and Savita Subramanian.
In other news, Biden administration officials have discussed capping sales of advanced AI chips from Nvidia Corp. and other American companies on a country-specific basis, people familiar with the matter said, a move that would limit some nations’ artificial intelligence capabilities.
Bitcoin steadied after rising 5% on Monday, buoyed by growing indications that the US regulatory outlook for the cryptocurrency sector will improve after the upcoming presidential election.
Key events this week:
Eurozone industrial production, Tuesday
Goldman Sachs, Bank of America, Citigroup earnings, Tuesday
Fed’s Mary Daly, Adriana Kugler speak, Tuesday
Morgan Stanley earnings, Wednesday
ECB rate decision, Thursday
US retail sales, jobless claims, industrial production, Thursday
Fed’s Austan Goolsbee speaks, Thursday
China GDP, Friday
Fed’s Christopher Waller, Neel Kashkari speak, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 12:07 p.m. Tokyo time
Japan’s Topix rose 1.1%
Australia’s S&P/ASX 200 rose 0.8%
Hong Kong’s Hang Seng fell 1.4%
The Shanghai Composite fell 0.6%
Euro Stoxx 50 futures rose 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0902
The Japanese yen rose 0.1% to 149.59 per dollar
The offshore yuan fell 0.3% to 7.1158 per dollar
Cryptocurrencies
Bitcoin fell 0.3% to $65,676.95
Ether rose 0.1% to $2,624.91
Bonds
The yield on 10-year Treasuries declined one basis point to 4.09%
Japan’s 10-year yield advanced one basis point to 0.955%
Australia’s 10-year yield declined two basis points to 4.25%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Shery Ahn and Jason Scott.
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