Business Maverick

Business Maverick

Asian stocks snap gaining streak as Li Auto drags: markets wrap

Asian stocks snap gaining streak as Li Auto drags: markets wrap
Pedestrians pass a LVHM Moet Hennessy Louis Vuitton SE store at Harbour City shopping mall in Hong Kong, China, on Friday, 2 June 2023.

Asian shares took a breather on Tuesday after seven days of gains, as Li Auto Inc.’s weak earnings report dragged down sentiment. Most of the region’s currencies slipped against the dollar.

While Japanese shares rose, Chinese and Australian stocks retreated. MSCI’s all-country gauge fell after an eight-day advancing streak. Equities in Hong Kong fell, with Li Auto leading losses in the MSCI Asia Pacific index after the company reported first-quarter vehicle sales that missed estimates.

Gold and copper changed hands near their all-time highs and wheat prices surged. The Bloomberg Commodity Spot Index reached its highest level since January 2023 on Monday.

Copper prices breaking out to a record “has been a good sign for further gains since 1959,” said Jason Goepfert, founder of Sundial Capital Research. Historically, “other markets mostly reacted positively to copper breakouts, especially stocks over the next couple of months. Bond prices tended to suffer, as did the U.S. dollar.”

In Asia, China’s economic struggles remain in the spotlight, with fresh data showing there’s little sign of a turnaround in its debt-plagued property sector. Local governments reaped the least revenue in eight years through land sales last month, showing the fiscal strains faced by those authorities who depend on such revenue for a large chunk of their total income. 

Traders’ focus may also turn to Nvidia Corp. — one of the top companies powering the artificial-intelligence frenzy — which is due to report earnings later this week. 

“For the market to keep momentum this week, it may come down to just one stock – Nvidia,” said Jay Woods at Freedom Capital Markets. “It sure feels like the hype for this earnings event will be the talk of trading desks and financial media all week.”

The yield on 10-year US Treasuries was little changed, while that on Japan’s 10-year debt nudged higher. 

The Bloomberg Dollar Spot Index gained as investors continue to eye the cautious mood from Federal Reserve officials. Speaking overnight, Cleveland Fed president Loretta Mester joined the ranks of US legislators suggesting less scope for interest rate cuts than previously expected. 

JPMorgan Chase & Co.’s Marko Kolanovic held firm in his gloomy outlook on equities, urging clients not to buy stocks, while acknowledging that this negative outlook has hurt JPMorgan’s model portfolio allocation over the past year as global equity markets rose to record highs. 

That came after Morgan Stanley’s Mike Wilson capitulated on his pessimistic stock view, leaving Kolanovic as the last prominent bear among Wall Street’s megabanks.

Elsewhere, Australia’s central bank resumed a discussion of interest-rate hikes at its May policy meeting before deciding that the case to stand pat was stronger as it aims to avoid “excessive fine tuning.” The Aussie fell as much as 0.3% versus the dollar before paring losses.

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