Asian shares rally on strong US tech results

Sydney — Asian shares were buoyed by a late bounce in US tech on Friday as results from Meta and Amazon beat expectations, while investors are bracing for US jobs figures, which could hasten bets for rate cuts if they come in below forecast.

Both quarterly results from Meta Platforms and Amazon.com impressed investors, with their shares surging 15% and 7% in after-hour trading, respectively, adding a combined $280bn in stock market value on Thursday. Apple, however, fell 3% after the close on disappointing China sales.

The risk rally is set to spill over to European markets, with Eurostoxx 50 futures up 0.9%. S&P 500 futures extended gains to be up 1% while S&P 500 futures rose 0.5%.

In Asia, Japan’s Nikkei added 0.5%, bringing the weekly gain to 1.2%, while MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 1.2% and was up 0.7% on the week.

However, weak China sentiment again weighed on the local markets. China’s bluechips fell 0.7%, while Hong Kong’s Hang Seng index pared earlier gains to be up just 0.3%.

The tech rally has helped wash over the flurry of worry around US regional banks, though that part of the market remains under pressure. The KBW Regional Banking index fell 2%, after its 6% slide the day before.

Concerns about the health of regional lenders resurfaced after New York Community Bancorp reported increased stress in its commercial real estate portfolio.

“It does provide another bit of a headwind for sentiment within the equity market. But for the Fed, I think that at this stage it’s not yet a concern that will tilt them or force them into some policy action,” said Rodrigo Catril, senior forex strategist at National Australia Bank.

For now, investors are mostly waiting for US payrolls data on Friday. Economists expect the US economy added 180,000 new jobs in January, while the jobless rate ticked up to 3.8% from 3.7%.

That would come after a surprise jump in jobless claims and a weak private payrolls report.

“If you look at the distributions of the survey, it actually has a significantly wide distribution, so there’s a greater degree of uncertainty in terms of the outcome,” said Catril.

“Although yesterday Fed chair [Jerome] Powell didn’t think a March rate cut was likely, ultimately … the data will determine the case for when the Fed should start easing.”

Payrolls

A downside miss in payrolls could bring a March rate cut back into play. Markets still see a chance of a March move at about 40%, while the probability for a May move stood at 32 basis points — implying a 100% probability of 25 basis points and some chance of a 50 basis-point easing.

Reflecting the still sizeable cuts to come this year — about 145 basis points priced in — and renewed jitters over regional US banks adding to safe-haven demand, longer-term Treasuries are headed for the best week since mid December.

Ten year treasury yields rose 2 basis points to 3.887%, but were still down a whopping 27 basis points for the week. The rate sensitive two-years were also up 2 bps at 4.2186%, but down 15 bps on the week.

The slide in yields pressured the US dollar, which fell 0.5% overnight against its peers and on Friday stuck to the low end of its recent range at 103.03.

The euro was buoyant at $1.0877, having lifted 0.5% overnight after data showed underlying price pressures in the eurozone were still strong. The sterling perched at $1.2745, having rallied 0.5% overnight after the Bank of England said it would tread carefully about rate cuts.

In energy markets, oil prices recouped some losses from the previous day after a decision by Opec+ to keep its oil output policy unchanged, though they are still headed for weekly losses.

Brent crude futures rose 0.6% to $79.15 a barrel, after falling more than 2% the previous day and US West Texas Intermediate crude gained 0.5% to $74.2 a barrel.

Safe-haven gold was flat at $2,055.20.

Reuters