Asian stock markets followed Wall Street higher Monday as investors looked ahead to a crowded week of corporate earnings, a possible US interest rate cut and other potentially market-moving events.
Asian stock markets followed Wall Street higher Monday as investors looked ahead to a crowded week of corporate earnings, a possible US interest rate cut and other potentially market-moving events. Benchmarks in Shanghai, Tokyo and Hong Kong all rose as fears about US-Chinese trade tension and Brexit receded. Markets shrugged off soft earnings from US companies including Boeing and Caterpillar. Some 160 more companies are due to announce their earnings this week, including Alphabet, Apple, Facebook, General Electric and Exxon Mobil. Investors are looking to the Federal Reserve for another US interest rate cut this week.
Central banks in Japan and Canada also are due to announce interest rate decisions. The US Treasury is due to report which governments are deemed to manipulate their currencies to boost exports, a designation that can trigger penalties. A watch list issued in May included China, Japan and Germany. This will be “one of the most substantial data and event risk weeks of the year,” said Jeffrey Halley of Oanda in a report.
“Stock markets and energy will likely be punished should earnings or data from the US or China disappoint.” The Shanghai Composite Index rose 0.8 per cent to 2,976.89 and Tokyo’s Nikkei 225 gained 0.3 per cent to 22,867.27. Hong Kong’s Hang Seng added 0.9 per cent to 26,893.81. South Korea’s Kospi was up 0.3 per cent at 2,093.60 and Australia’s S&P-ASX 200 was up 1 point at 6,740.70. Taiwan advanced while markets in New Zealand, Singapore and India were closed for holidays.
On Wall Street, the benchmark S&P 500 index closed Friday within 0.1 per cent of its all-time high on July 26. The S&P 500 rose 0.4 per cent to 3,022.55 and the Dow Jones Industrial Average gained 0.6 per cent to 26,958.06. The Nasdaq climbed 0.7 per cent to 8,243.12. Investor attention shifted to corporate earnings as tension eased after Washington and Beijing resumed negotiations. Both sides have imposed tariffs on billions of dollars of each other’s goods. The 15-month-old conflict has battered factories and farmers on both sides and spurred fears the global economy might tip into recession.
On Monday, Vice President Mike Pence is due to deliver a speech on US-China relations amid tension over protests in Hong Kong. Investors expect the Fed to cut its benchmark rate by 0.25 per cent following signs of US economic weakness. Also, markets are watching a monthly Chinese manufacturing indicator due out Friday for signs of whether economic growth is weakening further after slowing to a three-decade low in the quarter ending in September.
On Sunday, the government reported profits at China’s biggest industrial companies declined by a bigger-than-expected 2.1 per cent from a year earlier in the first nine months of 2019. Profit at state-owned companies fell 9.6 per cent while it rose 5.4 per cent at private enterprises. In Europe, the other 27 EU governments agreed Friday to grant Britain’s request for an extension to its October 31 deadline to leave the trade bloc. But they failed to settle on how long that delay might be.
British politicians want to know the length of the delay before deciding whether to hold an early election. The EU, meanwhile, wants to know what Britain plans to do with the extra time. ENERGY: Benchmark US crude lost 10 cents to USD 56.56 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 43 cents on Friday to close at USD 56.66. Brent crude, used to price international oils, shed 12 cents to USD 61.61 per barrel in London. It rose 34 cents the previous session to USD 61.73. CURRENCY: The dollar advanced to 108.72 yen from Friday’s 108.66 yen. The euro gained to USD 1.1090 from USD 1.1080.