The MSCI Asia Pacific Index rose for a third day, with gains from Hong Kong to Japan and South Korea. The region’s chip-related stocks tracked the strength in their American peers. US futures increased in early Asian trading. 

The dollar and Treasuries were steady. The yen remained a whisker away from the key 155 level to the dollar, with a former top Japanese foreign exchange official warning the country is on the brink of currency intervention.

In addition to the strong performance of the US tech giants, weakness in measures of business activity in the world’s largest economy also helped keep alive forecasts for US interest rate cuts this year. A slide on Wall Street in the past few weeks had made stocks more attractive as it removed market froth, with investors now focused on earnings, according to Citigroup strategists.

“We’ve seen a nice bounce on Wall Street ahead of Big tech earnings, and that should filter through to Asian equity markets today,” said Matt Simpson, a senior market strategist at City Index Inc. “I’d stop short of calling it a risk-on rally at this stage, although there is some relief that the ECB and BOE seem happy to ‘decouple’ from the Fed.”

The S&P 500 notched its best back-to-back rally in two months. Nvidia, the poster child of the artificial-intelligence boom, led a surge in chipmakers. Texas Instruments gave a bullish revenue forecast — a good sign for the chip industry that may help lift Asian producers on Wednesday.

Oil held a gain as an industry report showed shrinking US crude stockpiles and traders tracked progress toward fresh sanctions against Iran. Gold edged lower. 

Elsewhere, Australia’s inflation came in faster than expected in the first three months of 2024, suggesting price pressures are proving sticky and reinforcing the case for the Reserve Bank to hold interest rates at a 12-year high next month.

In the corporate world, Silchester International Investors, a London-based firm that has advocated for corporate change in Japan, disclosed it has taken a stake in Nikon, pushing the shares up by the most in almost three years.

Earnings on watch

In late US hours, Tesla soared as the electric-vehicle giant struck an upbeat tone despite a sales miss, the first of the “Magnificent Seven” megacaps to report. The stock halted a seven-day plunge, climbing alongside other members of the group. 

Morgan Stanley’s Mike Wilson said the bar is high for US firms to deliver on earnings, particularly for megacap technology names, which face tough comparisons from the growth they showed last year. 

Besides Tesla, Microsoft, Meta and Alphabet are also due to report earnings this week. Profits for the “Magnificent Seven” group — which also includes Apple, Amazon.com and Nvidia — are forecast to rise about 40% in the first quarter from a year ago, according to Bloomberg Intelligence data.

The group of tech megacaps is crucial to the S&P 500 since the companies carry the heaviest weightings in the benchmark. After this year’s advance, valuations have got lofty. After the latest selloff, the Magnificent Seven still traded at a combined 31 times forward earnings, according to data compiled by Bloomberg.