Most Asian stocks gained after US equities rallied as investors focused on the outlook for earnings amid an economic revival. Treasuries advanced.
Japan outperformed, while Hong Kong and Australia had more modest gains. US futures edged lower, while European futures rose. Treasury yields fell, with the 10-year dropping below its 50-day moving average for the first time since November. The dollar was steady. Oil added to losses with an increase in US crude inventories compounding concerns around a choppy global demand recovery.
Earlier, most major groups in the S&P 500 rose, with raw-material, energy and financial shares leading the charge. A gauge of small caps climbed more than 2%, outperforming major benchmarks.
Traders are sifting through corporate results for signs on whether an anticipated jump in profits would bring with it forecasts for stronger growth. Equities had drifted lower on concern over a flare-up in coronavirus cases around the world that could jeopardise an economic rebound, particularly with stocks trading near their all-time highs.
“There is strong potential for additional upside in stocks particularly as we move through the earnings season and we start to have more forecasts for what the year ahead is going to look like,” Erin Browne, Pacific Investment Management Co. multi-asset strategies portfolio manager, said on Bloomberg TV. “While certainly investors have priced in a lot in terms of normalisation in certain segments of the market, I still think that there is room to run.”
Meanwhile, the European Central Banks meets Thursday and its expected to keep its policy unchanged, confirming that asset purchases under its pandemic program will run at a faster pace until June. The meeting will be of particular interest after the Bank of Canada became the first major central bank to signal it will pare back asset purchases and move up its expected timeline for potential rate hikes.
Here are some key events to watch this week:
- European Central Bank rate decision and President Christine Lagarde briefing on Thursday.
- US releases new home sales data Friday.
These are some of the main moves in markets:
- S&P 500 futures fell 0.1% as of 7 a.m. in London. The S&P 500 climbed 0.9%.
- Topix index rose 1.8%.
- Australia’s S&P/ASX 200 Index added 0.7%.
- Kospi index rose 0.2%.
- Hang Seng Index rose 0.5%.
- Shanghai Composite Index was little changed.
- Euro Stoxx 50 futures rose 0.6%.
- The yen was little changed at 107.99 per dollar.
- The offshore yuan traded at 6.4835 per dollar, up 0.1%.
- The Bloomberg Dollar Spot Index was little changed.
- The euro was little changed at $1.2034.
- The yield on 10-year Treasuries dropped about two basis points to 1.54%.
- Australia’s 10-year bond yield fell three basis points to 1.71%.
- West Texas Intermediate crude fell 0.5% to $61.03 a barrel.
- Gold slipped 0.2% to $1 790.94 an ounce.