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Asia shares rise as tech fuels cautious optimism: markets wrap

Asia shares rise as tech fuels cautious optimism: markets wrap
A woman walks past an exchange office with an electronic panel displaying currency exchange rates for US dollar and Euro against Russian ruble in Moscow, Russia, 14 August 2023. (Photo: EPA-EFE / Sergei Ilnitsky)

Asian equities advanced amid cautious optimism that solid post-market US tech earnings are set to spur a rebound on Wall Street. 

Shares traded higher in Hong Kong, while Australian, Japanese and South Korean stocks were also in the green. Mainland Chinese shares fluctuated after data on industrial companies’ profit showed growth, though slightly softer than in the prior period.

Contracts on the Nasdaq 100 climbed in the Asian session after the underlying benchmark fell 1.9% on Thursday. Amazon.com and Intel both gained in after-trading hours after the tech-heavy index hit its lowest since May. The advance in US futures points to an early rebound when trading begins on Wall Street after the S&P 500 came to the brink of closing in correction territory.

Higher US GDP growth, a less dire industrial profit slump in China and earnings beats by US tech giants “bakes into a long-awaited relief for stressed investors,” said Hebe Chen an analyst at IG Markets in Melbourne. “As we approach the end of the month, investors are holding their breath for next week’s FOMC meeting, which is poised to set the tone for the remainder of the year.”

Treasury yields ticked slightly higher after falling Thursday following a solid seven-year bond auction and a rise in continuing jobless claims, an indication the US labour market is starting to crack despite still strong economic growth. Traders are now awaiting the PCE deflator print on Friday to solidify bets the Federal Reserve will pause next week.

Still, swaps contracts project a roughly one in three chance of another Fed hike in the current tightening cycle, according to data compiled by Bloomberg. 

Elsewhere, China’s industrial companies saw profits rise in September for a second straight month, in a further sign that policy support is helping the manufacturing sector recover.

High sense of urgency

In currencies, the dollar fell, while the yen was steady after Tokyo inflation, an indicator of Japanese consumer cost pressures, unexpectedly accelerated for the first time in four months. Japan’s Finance Minister Shunichi Suzuki reiterated that officials are watching currency moves with a high sense of urgency.

Also in focus is the meeting between China’s Foreign Minister Wang Yi and US Secretary of State Antony Blinken in Washington. In his US visit, Wang said the two countries should have “in-depth” talks as they need to address common interests and reduce misunderstandings, the official Xinhua News Agency reported. 

Meanwhile, traders are keeping a close eye on geopolitical developments in the Middle East, with Israel’s military saying it killed Hamas’s deputy head of intelligence, who it said was responsible for helping plan the 7 October attacks. The army overnight also made a limited ground raid into northern Gaza while Iran escalated its rhetoric with the US.

West Texas Intermediate oil traded around $84-a-barrel, set for a weekly drop on the back of bearishness in equity markets. Gold was steady after two days of gains as the conflict in the Middle East continues to offer support for the precious metal.

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