March 26, 2024 (MLN): Most Asian shares rose with US stock futures as investors positioned ahead of quarter-end and the Federal Reserve’s preferred inflation measure due later this week, as Bloomberg reported.
MSCI’s broad Asian equity gauge headed for its first gain in three days, led by technology and chip stocks.
That followed recent gains in Micron Technology Inc., the largest US maker of computer memory chips,, to a fresh all-time high on the back of a better-than-expected sales forecast.
The offshore yuan strengthened for a second day after China’s central bank once again ramped up support for the currency.
The yen crept higher, backing away from a four-month low against the dollar set last week.
The emergence of buyers on weakness in Japan, artificial intelligence names and India also supported regional equities, said Kieran Calder, head of equity research for Asia at Union Bancaire Privee. “Last week’s Bank of Japan decision confirmed expected structural changes in Japan, which may be at the end of the beginning of normalization.”
There are still plenty of reasons for investors to be cautious given the number of risk events in coming days.
The US government will publish its personal consumption expenditures price index on Good Friday when local markets will be closed. On that same day, Fed Chair Jerome Powell is due to speak.
There is also plenty of uncertainty surrounding the yen, with Japan’s Finance Minister Shunichi Suzuki saying Tuesday the government will take appropriate steps against excessive currency moves, without ruling out any measures.
Treasuries edged higher in Asian trade, while the dollar weakened against most of its Group-of-10 peers.
Pullback ‘Overdue’
A sense of prudence also prevailed among investors early this week as concern about a disconnect between earnings expectations and share prices have grown.
Morgan Stanley and JPMorgan Chase & Co. strategists were the latest to warn it’ll be hard to justify lofty valuations if profit acceleration fails to materialize.
“We continue to see sentiment as stretched and think a US equity market pullback is overdue,” said Lori Calvasina at RBC Capital Markets.
In a sign of how overheated the stock market has been, the S&P 500 finished last week 14% above its 200-day moving average.
Still, the combination of healthy US economic data, expectations the Fed will cut rates and optimism about artificial intelligence have all driven the S&P 500 up almost 10% this year.
“Although AI optimism appears high, long-term growth expectations and valuations for the largest TMT stocks are still far from ‘bubble’ territory,” the strategists led by David Kostin wrote.
In other markets, oil steadied after the biggest gain in a week, with OPEC+ set to affirm its policy of production cuts amid tensions in the Middle East and Russia. Gold hovered near a record high.
Copyright Mettis Link News
Posted on: 2024-03-26T09:02:53+05:00
