Written by Stella Chiu
SYDNEY (Reuters) – Asian stocks extended their gains on Tuesday on stimulus from Wall Street as the focus shifted this week to the results of major U.S. tech companies, while a still-strong dollar pushed the Japanese yen to its lowest level in 34 years. Prices were squeezed to lows.
MSCI's broadest index of Asia-Pacific stocks outside Japan was at 0.00, supported by a 1% rise in Taiwanese stocks and a 0.8% rise in Hong Kong's Hang Seng Index. It rose by 5%.
Asian indexes rose 1% a day earlier, reversing some of last week's 3.7% decline as fears of a major escalation in the Middle East conflict eased. Japan's Nikkei Stock Average rose 0.1%.
The region's tech stocks rejoiced. Taiwan Semiconductor Manufacturing rose 1.5% and the MSCI Asia Pacific (ex Japan) IT Index rose 0.8%.
However, Chinese stocks fell, with blue chips falling 0.6%.
On Wall Street, big tech stocks outperformed ahead of this week's quarterly results, with the Nasdaq index up 1.1%. AI darling Nvidia rose 4.4%, Amazon.com Inc. rose 1.5% and Alphabet Inc. rose 1.4%, while major market bearer Tesla Inc. fell 3.4%.
“Earnings reports in the coming weeks are likely to be positive, but clearly there are still questions about what the Fed will do next,” said Shane Oliver, chief economist at AMP. “It is too early to say that the problems in the Middle East are gone.”
“There's a lot of things that could cause volatility between now and the end of the year. So we're probably going to see a more constrained market and a more volatile period.”
Tech giants like Tesla, Metaplatform, Alphabet and Microsoft will report earnings this week.
UBS downgraded mega-cap companies on Monday, warning that the earnings growth momentum of so-called Big Six tech stocks could “collapse” in the coming quarters.
In addition to top corporate earnings, markets are awaiting the release of U.S. gross domestic product (GDP) data later this week and March consumer spending data, the Fed's preferred measure of inflation, for further insight into the trajectory of monetary policy. There is.
Traders said while the Fed's first rate cut will most likely occur in September, the total amount of easing expected this year is only 40 basis points, a sharp change from the roughly 150 basis points of rate cuts priced in at the beginning of the year. Then I see it.
The significant change in interest rate expectations has pushed both the two-year and 10-year Treasury yields up nearly 100 basis points from their recent lows.
Interest rates were little changed on Tuesday amid a lack of data and news, with the two-year yield at 4.9713% and the 10-year yield at 4.6167%.
The euro was pegged at $1.0659, just below the five-month low of $1.0601 reached last week, as the divergence in interest rate outlooks in the United States and Europe weighed on the euro.
The struggling yen continued to hit new lows in 34 years. The dollar rose 0.1% to 154.71, after hitting a new low of 154.85 overnight. [FRX/]
The risk of intervention remains high after Japan's Finance Minister Shunichi Suzuki said last week's tripartite meeting with the US and South Korean finance ministers laid the foundation for Japan to take appropriate action in the foreign exchange market.
Oil prices recovered some of their steep decline overnight as investors continued to assess the situation in the Middle East. Brent futures rose 0.2% to $87.16 per barrel, while U.S. crude oil rose 0.2% to $82.06 per barrel. [O/R]
However, gold prices fell 1% to $2,295.9 an ounce after falling 2.7% overnight.
(Reporting by Stella Qiu; Editing by Sam Holmes)
