A bronze bull statue outside the Bombay Stock Exchange building in Mumbai, India, on Monday, 3 June 2024. The MSCI AC Asia Pacific Index headed for its longest stretch of gains since May. Equity benchmarks in Hong Kong, Japan and Australia gained, while those in China and South Korea were little changed.
Contracts for the S&P 500 edged lower after the benchmark closed above 5,500 for the first time, the gauge’s 32nd record this year. Tesla surged 10% to lead gains in megacaps, helping the Nasdaq 100 close above the 20,000 mark for the first time.
The new record high close in the S&P 500 and Nasdaq “could also be taken as another win given the psychological significance that ‘round numbers’ hold”, said Chris Weston, head of research at Pepperstone Group in Melbourne. “Asia too will take some inspiration, not just from the net change in US markets, but because it wasn’t just tech that has propped up the respective indices, and we’ve seen somewhat better breadth and participation.”
In other markets, Australia’s three-year bond yield extended its rise after better-than-expected retail sales data reinforced the case for an interest-rate hike. Oil steadied around a two-month high, while the Bloomberg Dollar Spot Index and Treasury yields were little changed.
Investors are looking to US initial jobless claims and ADP employment data due Wednesday to gain more clues on the policy outlook. Fed Chair Powell acknowledged the Fed has made “quite a bit of progress” in reducing inflation but emphasized officials need more evidence before lowering interest rates.
In Asia, traders will be looking for signs of improvement in China’s beleaguered housing market after China Vanke Co.’s sales stalled and Country Garden Holdings Co.’s slumped further last month.
Data on Wednesday showed Caixin Media and S&P Global’s China June composite purchasing managers’ index slipped to 52.8 last month from 54.1 in May.
Meanwhile, the central bank’s plan to borrow bonds may slow, according to analysts. The People’s Bank of China has been pushing back against the nation’s bond rally for months and hinted it may sell some of its own holdings to cool the advance in May.
In the US, equities keep defying doomsayers amid solid corporate earnings, the artificial-intelligence mania and expectations that interest rates will drop, adding more than $16-trillion to the S&P 500’s value from a closing low in October 2022. A lack of any meaningful pullback has given bulls conviction that the rally is sustainable.
On the economic front, data on Tuesday showed job openings unexpectedly rose, interrupting a trend that underscored a slowdown in labor seen as key for Fed easing.
While the US market will close early on Wednesday due to Thursday’s holiday, investors are also gearing up for the all-important US payrolls reading due on Friday. Economists expect the report to show employers added about 190,000 payrolls in June and the unemployment rate likely held at 4%.