(Bloomberg) — Stocks and currencies in Asia advanced as some calmness returned following a bout of political uncertainty, with traders turning their focus to upcoming tech earnings.
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The MSCI Asia Pacific Index snapped a three-day decline, led by a rebound in Taiwanese shares. That followed a 1.1% jump in the S&P 500 ahead of earnings from Tesla Inc. and Alphabet Inc. due later Tuesday. Asian currencies strengthened against a softer dollar.
Markets are taking a breather after sky-high valuations and sectoral rotation sparked a heavy tech selloff over the past few sessions. While US election developments still dominate headlines, Kamala Harris now has more than enough pledged delegates to clinch the Democratic presidential nomination — offering clarity on that front.
“Risk sentiments and Democrat support for Kamala Harris appear to be (at least on the way to) solid,” said Vishnu Varathan, head of economics and strategy for Mizuho Bank Ltd. in Singapore. “What remains to be seen is whether a bull rotation will see gains cascading down from the ‘Magnificent 7,’ more broadly into smaller cap.”
Hong Kong and mainland Chinese stocks dipped on broad disappointment following the Third Plenum, with a surprise rate cut on Monday failing to reverse sentiment.
The yen strengthened ahead of the Bank of Japan’s policy meeting next week. Some BOJ officials are open to raising rates at the July meeting while others see weakness in consumer spending complicating their decision, according to people familiar with the matter.
A Bloomberg gauge of the dollar eased for the second session. Treasury yields edged lower ahead of this week’s readings on the economy as well as the Federal Reserve’s preferred inflation gauge. For much of July, bets on a rate cut in September drove shorter-term bonds up — narrowing the gap with longer-dated maturities.
In the corporate world, shares of Kako Corp. slumped after South Korean authorities arrested its founder Brian Kim over allegations of market manipulation, making the internet entrepreneur the most prominent business figure in the country in years to wind up in jail.
Elsewhere in Asia, India’s Finance Minister Nirmala Sitharaman will present the budget Tuesday, laying out economic priorities of a new coalition government under Prime Minister Narendra Modi.
Earnings Await
Earnings due in the region this week include SK Hynix Inc., Contemporary Amperex Technology Co. and Keyence Corp.
Almost two-thirds of respondents to Bloomberg’s Markets Live Pulse survey expect earnings to reinvigorate the US benchmark. A gauge of the “Magnificent Seven” climbed more than 2% Monday, led by gains in Tesla and Nvidia Corp.
After driving the rally in US stocks for most of the year, big tech slammed into a wall last week. Investors rotated from high-flying megacap shares to riskier, lagging parts of the market, spurred by bets on Fed rate cuts and the threat of more trade restrictions on chipmakers.
In commodities, oil was steady near a six-week low as traders waited for fresh clues on market balances, including the outlook for US stockpiles.
Key events this week:
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Eurozone consumer confidence, Tuesday
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US existing home sales, Tuesday
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Alphabet, Tesla, LVMH earnings, Tuesday
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Canada rate decision, Wednesday
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US new home sales, S&P Global PMI, Wednesday
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IBM, Deutsche Bank earnings, Wednesday
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Germany IFO business climate, Thursday
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US GDP, initial jobless claims, durable goods, Thursday
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US personal income, PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.1% as of 11:37 a.m. Tokyo time
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Nikkei 225 futures (OSE) rose 0.4%
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Japan’s Topix rose 0.5%
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Australia’s S&P/ASX 200 rose 0.7%
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Hong Kong’s Hang Seng was little changed
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The Shanghai Composite fell 0.5%
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Euro Stoxx 50 futures rose 0.3%
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Nasdaq 100 futures fell 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0892
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The Japanese yen rose 0.2% to 156.65 per dollar
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The offshore yuan was little changed at 7.2901 per dollar
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The Australian dollar fell 0.1% to $0.6636
Cryptocurrencies
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Bitcoin fell 0.8% to $67,600.71
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Ether fell 0.2% to $3,482.17
Bonds
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The yield on 10-year Treasuries declined two basis points to 4.24%
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Japan’s 10-year yield was little changed at 1.065%
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Australia’s 10-year yield advanced two basis points to 4.33%
Commodities
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West Texas Intermediate crude rose 0.2% to $78.53 a barrel
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Spot gold rose 0.2% to $2,401.46 an ounce
This story was produced with the assistance of Bloomberg Automation.
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