Stocks shake off bank woes, set for quarterly gain: markets wrap

US equity futures ticked higher and Asian stocks advanced as a gauge of global shares headed for a second-straight quarterly gain, underscoring investor optimism in the face of banking turmoil and elevated interest rates.

Technology shares led the charge this quarter, surging 19%, the most since mid 2020. The upbeat tone has been on display this week, with the S&P 500 climbing 0.6% Thursday in its third increase in four days. The Nasdaq 100 rose 0.9% overnight, pushing further into a bull market.

Benchmark indexes in Japan and South Korea led Friday’s rally and were also on course for quarterly gains. The Topix index jumped by 1% after paring some of its move on news that Japan would impose new restrictions on chip exports.

The dollar, which has weakened this month, was little changed Friday against most major peers.

Treasuries were steady in Asian trading after a tumultuous period. There have been wild swings in yields this year as investors struggled to adjust for banking collapses and the shifting outlook for interest rates amid high inflation and threats to economic growth. The two-year yield was around 4.10% Friday while the 10-year maturity was about 3.55%.

The gains Thursday in US stocks came as market watchers digested a round of Fed commentary suggesting more monetary tightening was necessary, even after the collapse of three US banks earlier this month. Boston Fed President Susan Collins said tightening was needed, while Richmond Fed President Thomas Barkin said the Fed can raise rates more if inflation risks persist.

Positive signals out of China have helped the Bloomberg Commodity Index pare its quarterly loss, with oil recovering half of the ground it lost since early March.

An official gauge of manufacturing released Friday showed China managed to keep the momentum in its economic recovery in March, falling only slightly to 51.9 from 52.6 in February, and beating the median of estimates from economists.

Most market watchers are still betting on China’s recovery underpinning a price rally later this year. That optimism is also apparent in share sale plans for Chinese equities. Alibaba Group Holding Ltd.’s logistics arm Cainiao Network Technology Co. — currently valued at more than $20 billion — has started preparations with banks for its Hong Kong initial public offering. Meanwhile, shares in rival JD.com soared in the US after two of its subsidiaries filed for IPOs in Hong Kong.

“The fact these companies are embarking on value unlocking, you would speculate that maybe these companies have the support of Beijing,” Chetan Seth, Asia-Pacific equity strategist at Nomura Holdings Inc., said on Bloomberg Television. “This was not the case six months ago. So I would say very good for China equities.”

Traders were still on guard for any choppiness amid quarter-end rebalancing from pension funds and options hedging activity. And they continue to debate the extent to which policy makers may cut interest rates this year.

“You have to assume now that the game has changed and that the Fed is gonna be more moderate,” Rick Rieder, chief investment officer of global fixed income at BlackRock Inc., said on Bloomberg Television. “We’re at levels today that are very restrictive.”

Still, several strategists have said markets are wrong to expect cuts by the Fed this this year as the labor market remains robust, though US unemployment claims ticked up for the first time in three weeks. High inflation — as measured by the so-called PCE Core Deflator due Friday — is expected to have persisted last month.

Back in Asia, FTSE Russell will keep South Korea on the watch list for inclusion to its global bond index — and India for the emerging-market equivalent — prolonging the countries’ wait to get into key market gauges.

Elsewhere, oil traded near a two-week high. Gold was little changed on Friday, but headed for the biggest monthly increase since July 2020. Bitcoin was set to end its best quarter since March 2021 with around 70% gain.

Key events this week:

• Eurozone CPI, unemployment, Friday
• US consumer income, PCE deflator, University of Michigan consumer sentiment, Friday
• ECB President Christine Lagarde speaks, Friday
• New York Fed President John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 6:45 a.m. London time. The S&P 500 rose 0.6%
• Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.9%
• Euro Stoxx 50 futures were little changed
• Japan’s Topix index rose 1%
• Hong Kong’s Hang Seng Index rose 0.8%
• China’s Shanghai Composite Index rose 0.3%
• Australia’s S&P/ASX 200 Index rose 0.8%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0900
• The Japanese yen fell 0.2% to 132.95 per dollar
• The offshore yuan rose 0.1% to 6.8664 per dollar
• The Australian dollar was little changed at $0.6716
• The British pound was little changed at $1.2387

Cryptocurrencies

• Bitcoin was little changed at $28,156.76
• Ether rose 0.4% to $1,802.82

Bonds

• The yield on 10-year Treasuries was little changed at 3.55%
• Japan’s 10-year yield advanced one basis point to 0.32%
• Australia’s 10-year yield declined six basis points to 3.30%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold was little changed