Asian Stocks Track US Higher, China Set to Reopen: Markets Wrap
(Bloomberg) — Asian stocks rose as traders navigated their way through a US-China trade war and earnings from Wall Street’s big tech companies. Chinese markets were set to reopen on Wednesday.
Shares in Australia and Japan rose along with stock futures for Hong Kong. Contracts for US equities edged lower as Google’s parent Alphabet Inc. and Advanced Micro Devices Inc. tumbled in extended trading. US stock indexes had earlier rebounded after a wave of dip-buying with a Bloomberg gauge of the “Magnificent Seven” megacaps advancing 1.7%. Treasury yields edged higher.
The first volleys in the latest US-China trade war made clear that Xi Jinping is taking a more cautious approach than during Donald Trump’s first term. After the US leader gave last-minute reprieves to Canada and Mexico, his 10% tariffs on China took effect on Tuesday. Beijing swiftly announced additional tariffs on roughly 80 products to take effect on Feb. 10, but traders are hoping upcoming talks will ease tensions.
“There is a reasonable likelihood that the ultimate impact from these tariffs may be less than expected,” said Todd Ahlsten at Parnassus Investments. “These tariffs may also represent the first round of an ultimate negotiation, which could reduce their ultimate impact.”
In Asia, Chinese traders are on tenterhooks ahead of Wednesday’s market reopen as the tariff drama shakes up the investment landscape. Volatility is set to stay high as investors brace for an escalation while also hedging against the odds of a sudden breakthrough. The offshore yuan recovered after a knee-jerk slide on Tuesday. Chinese stocks in Hong Kong have displayed resilience, while a gauge of US-listed Chinese companies rose 2.7%.
“The uncertainty that was bothering the market about tariffs is now gone and we have clarity,” said Kenny Ng, a strategist at China Everbright Securities International. “This actually brings a clearer outlook for the market. I expect Chinese stocks to see a relatively strong open.”
Elsewhere, the Bank of Japan is likely to keep raising its benchmark rate to a level exceeding the current market consensus, according to a former executive director at the central bank. The yen advanced to around 154 per greenback on Tuesday.
In commodities, oil edged lower as concerns that the trade war would hurt global growth outweighed the announcement of reinforced sanctions on Iran.
Key events this week:
- China Caixin services PMI, Wednesday
- Eurozone HCOB Services PMI, PPI, Wednesday
- US trade, Wednesday
- Fed’s Austan Goolsbee, Tom Barkin, Michelle Bowman, Philip Jefferson speak, Wednesday
- Eurozone retail sales, Thursday
- UK rate decision, Thursday
- US initial jobless claims, Thursday
- Fed’s Christopher Waller, Lorie Logan speak, Thursday
- Amazon earnings, Thursday
- US nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Friday
- Fed’s Michelle Bowman, Adriana Kugler speak, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.4% as of 9:06 a.m. Tokyo time
- Hang Seng futures rose 0.6%
- Japan’s Topix rose 0.7%
- Australia’s S&P/ASX 200 rose 0.5%
- Euro Stoxx 50 futures rose 1.1%
- Nasdaq 100 futures fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0372
- The Japanese yen was little changed at 154.21 per dollar
- The offshore yuan was little changed at 7.2914 per dollar
- The Australian dollar was little changed at $0.6250
Cryptocurrencies
- Bitcoin rose 1.5% to $97,947.92
- Ether rose 3.3% to $2,726.06
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.52%
- Australia’s 10-year yield advanced one basis point to 4.43%
Commodities
- West Texas Intermediate crude fell 0.2% to $72.56 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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