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Asian stocks rise after tech giants boost Nasdaq: markets wrap

Asian stocks rise after tech giants boost Nasdaq: markets wrap
A man looking at his phone is reflected in a wall as an electronic board displays stock information at the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Monday, May 20, 2019.

Asian stocks advanced on Tuesday, buoyed by gains on Wall Street, as US shares extended their rally and a $16-billion sale of 20-year Treasuries lured bond buyers.

Technology stocks were among the outperformers, while the South Korean and Australian benchmarks also inched higher. China’s equities climbed after the Golden Dragon index of US-listed Chinese companies rallied more than 3.5%. US contracts rose after the S&P 500 had its strongest close since August and the Nasdaq 100 hit a 22-month high. 

Treasuries held their gains in early Asia trading following a strong 20-year auction in the previous session. Shortly after the auction results, US 10-year yields reversed course and fell to around 4.4% on Monday, pushing the dollar to an 11-week low. The greenback fell against all its Group-of-10 peers on Tuesday on bets that US rates may have peaked while the offshore yuan strengthened beyond the daily fixing for the first time since July.

The “mini” bear trend in the dollar has a little bit further to run, Richard Franulovich, head of FX strategy at Westpac Banking Corp., told Bloomberg Television.

The yen headed for a fourth day of gains on the back of a weaker dollar.

Chinese developers’ bonds and shares advanced after Bloomberg News reported late Monday that regulators are drafting a list of 50 developers eligible for a range of financing.  

Longfor Group Holdings Ltd.’s 3.85% note due 2032 rose 4.2 cents on Monday to 42 cents while the company’s shares gained as much as 12%. Seazen Group Ltd.’s 4.8% bond due 2024 climbed 3.4 cents to 35.4 cents, with both poised for their biggest gains in almost two weeks.

More clues of recovery in China may come from Baidu Inc. as well as Kuaishou Technology that are in the pipeline to report results on Tuesday. Baidu will probably report a 5.1% increase in revenue, estimates show, while Kuaishou may report little-changed earnings sequentially as improvements in content algorithms and e-commerce sales were offset by weaker live-streaming revenue.

In the artificial intelligence sector, OpenAI’s investors are still trying to return co-founder Sam Altman to a leadership role at the ChatGPT maker. Earlier, Microsoft Corp. climbed to fresh peaks after it hired Altman and Greg Brockman to lead its research team. In late US trading, Zoom Video Communications Inc. rose on better-than-expected sales, while Nvidia Corp. will report quarterly results Tuesday.

Attractive yields

Traders have also been fixated on Treasury sales, especially after the US recently offered an unusually large premium to sell 30-year securities. Those auctions have been exerting a growing sway over stocks, underscoring how the path of interest rates is gripping markets of late. The 20-year bond auction drew yields of 4.78%, compared with the pre-sale level of 4.79%.

After a more than three-decade hiatus, the Treasury resurrected 20-year bonds in May 2020. Before Monday’s auction, it had not sold the securities during the Thanksgiving week. They’ve traded at a discount to other long-term maturities — which caused a degree of apprehension ahead of the sale.

“Treasuries offer extremely attractive yields,” according to Principal Asset Management. “And while the potential for capital appreciation might be limited in the face of an impending economic slowdown, the assurance of a steady income from Treasuries makes them a solid option for investors prioritizing stability heading into an uncertain 2024.”

Meanwhile, the S&P 500 is set to rise toward its all-time high early next year, pull-back midyear and then rally back toward the highs, according to strategists at Societe Generale SA.

“The S&P 500 should be in ‘buy-the-dip’ territory, as leading indicators for profits continue to improve,” wrote Manish Kabra. “Yet, the journey to the end of the year should be far from smooth” he added, citing an economic downturn, a looming credit selloff, and ongoing quantitative tightening as hurdles traders still need to face.

Elsewhere, oil held a two-day rise amid speculation that OPEC+ may deepen production curbs when members gather this coming weekend.

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