(Bloomberg) — Asian stocks on Tuesday harnessed the tailwind from a technology-led rally in the U.S. that was spurred by dip buyers betting this year’s equity rout is going to ebb.
Shares rose in Japan and Australia, which are among the few markets open due to Lunar New Year holiday closures. U.S. futures edged down following the best two-day jump in the S&P 500 and tech-heavy Nasdaq 100 since April and November 2020, respectively.
Australia’s currency held gains before a central bank meeting that may end quantitative easing and pave the way for an interest-rate hike.
The U.S. 10-year Treasury yield and the dollar edged up. Oil extended a climb having posted its biggest January gain in at least 30 years, which helped to take the Bloomberg Commodity Spot Index to another record high.
The U.S. equity rebound pared January’s drop in global stocks to around 5%, still the worst monthly performance since the pandemic’s onset in 2020. Waves of volatility have swept across markets after the Federal Reserve pivoted to swifter monetary-policy tightening against inflation than many had expected.
Investors need to “get used to this up and down volatility” as there’ll likely be more of it, Nancy Davis, chief investment officer at Quadratic Capital Management, said on Bloomberg Television.
Fed officials said they want to avoid unnecessarily disrupting the U.S. economy as they prepare to start raising interest rates, showing little stomach for an aggressive 50 basis-point move in March.
Fed Speak
Kansas City Fed President Esther George said it’s in “no one’s interest to try to upset the economy with unexpected adjustments.” San Francisco Fed chief Mary Daly said policy moves “have to be gradual and not disruptive.”
For optimists, the corporate-earnings outlook continues to underpin the case for stocks. About 80% of U.S. companies that have reported so far this season have beaten or met projections.
“Investors should not lose sight of the fact that the economy remains strong, which should limit downside from current levels,” Solita Marcelli, Americas chief investment officer at UBS Global Wealth Management, wrote in a note.
Elsewhere, traders continue to monitor diplomatic efforts between the U.S. and Russia to defuse tension over Ukraine.
For more market analysis, read our MLIV blog.
What to watch this week:
- Earnings are due from Alphabet, Amazon, Exxon Mobil, Ford Motor, Meta Platforms, Qualcomm, Sony, Spotify, UBS Group
- Reserve Bank of Australia rate decision, Tuesday
- Manufacturing PMIs, including euro zone, Tuesday
- OPEC+ meeting on output, Wednesday
- Euro zone CPI, Wednesday
- Bank of England, European Central Bank rate decisions, Thursday
- Fed Board of Governors confirmation hearing, Thursday
- U.S. factory orders, initial jobless claims, durable goods, Thursday
- U.S. payrolls report for January, Friday
- Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 9:25 a.m. in Tokyo. The S&P 500 rose 1.9%
- Nasdaq 100 futures declined 0.2%. The Nasdaq 100 rose 3.3%
- Japan’s Topix index rose 1%
- Australia’s S&P/ASX 200 index advanced 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was at $1.1227
- The Japanese yen was at 115.15 per dollar
- The offshore yuan was at 6.3736 per dollar
Bonds
- The yield on 10-year Treasuries advanced one basis point to 1.79%
- Australia’s 10-year yield rose five basis points to 1.95%
Commodities
- West Texas Intermediate crude rose 0.3% to $88.42 a barrel
- Gold was at $1,796.97 an ounce
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