Technology Stocks Rise While Oil and Energy Stocks Fall: Markets Close

(Bloomberg) — European stock futures rose and Asian stocks fluctuated after another record high on Wall Street. Oil prices fell as concerns eased over Israel’s attack on Iranian energy facilities.

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Technology stocks outperformed in Asia, following their US counterparts higher, while oil and energy stocks fell after the Washington Post reported that Israel has no plans to attack Iranian oil or nuclear facilities. Treasury yields fell on Tuesday after the dollar gained against most of its Group of 10 peers.

MSCI’s Asia Pacific Index rose as much as 0.7% on the chip sector, with companies such as Taiwan Semiconductor Manufacturing Co. led the way, only to wipe out these gains. Japan’s Nikkei 225 Stock Average Index reached its highest level since July. The benchmarks in Australia and Taiwan also improved.

“APAC investors are likely to take a riskier approach as we head into the end of the year, supported by an improving macroeconomic backdrop in the region,” said David Chao, a global market strategist at Invesco Asset Management. “As long as oil remains stable and the Fed continues to cut rates, I think Asian currencies and risk assets are likely to outperform.”

With earnings reports set to boost U.S. sentiment this week, the S&P 500 rose nearly 1% on Monday, setting another record: 46th this year. That’s an indication that investors aren’t being deterred by lower expectations for third-quarter results, but are instead betting on positive surprises.

The Nasdaq 100 added 0.8%. Nvidia Corp. led the gains in megacaps, Apple Inc. posted gains after a bullish analyst call and Tesla Inc. recovered after last week’s dive. Goldman Sachs Group Inc. and Citigroup Inc. achieved an advantage in the results.

However, stocks in China and Hong Kong fell as investors looked for further stimulus from the Chinese government. The country’s stock benchmarks were up on Monday even after a much-anticipated weekend briefing from the Treasury Department lacked specific new incentives to boost consumption in the world’s biggest crude importer.

China could raise 6 trillion yuan ($846 billion) from ultra-long special government bonds over three years as part of its efforts to boost its sputtering economy, Chinese media outlet Caixin reported.

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“This is not the ‘bazooka’ some have been calling for, if defined as a major expansion of fiscal stimulus,” Michael Hirson and Houze Song of 22V Research said in a note. “On the face of it, it actually continues China’s current step-by-step approach.”

Chinese banks plan to cut interest rates on 300 trillion yuan ($42.3 trillion) of deposits this week after the latest barrage of stimulus policies further pressured their profitability, according to people familiar with the matter.

Still, there are more signs of economic weakness, as a report on Monday showed export growth in September unexpectedly rose just 2.4% in dollar terms from a year earlier, to the lowest level since May. That said, exports of both cars and ships hit records in September even as broader shipments slowed, underscoring the rapid changes in the nation’s industry that are fueling global trade tensions.

“The fundamentals should ensure that these policy tailwinds get the economy moving again,” Steve Brice, CIO of Standard Chartered Wealth Solutions Group, said on Bloomberg Television.

Meanwhile, reflecting strong demand for Japan’s biggest stock market listing in six years, Tokyo Metro Co.’s IPO raised ¥348.6 billion ($2.3 billion) after the company priced shares at the top end of the market , people familiar with the matter said.

Markets are also anticipating Hong Kong leader John Lee’s annual speech on Wednesday, in which he is expected to make boosting the economy a priority and set an agenda that includes a possible liquor tax cut and possible measures to strengthen the city’s status as a financial sector. center.

Japanese shares were among the biggest gainers on Tuesday. The yen was the best performer among the G-10 currencies, staying close to 150 against the dollar, an important psychological level with a risk of intervention for investors.

“Given the situation in the US and China, there are no selling factors in the macro environment and Japanese stocks are undervalued,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management Co.

Earnings season unofficially started in the US on Friday, led by financial regulators JPMorgan Chase & Co. and Wells Fargo & Co. In addition to other major banks reporting this week, traders will be paying close attention to the results of major companies like Netflix. Inc. and JB Hunt Transport Services Inc.

An early round of third-quarter financial results last week showed corporate America is benefiting from lower interest rates early in the Federal Reserve’s easing cycle, according to Bank of America Corp. strategists including Ohsung Kwon and Savita Subramanian .

In other news, Biden administration officials have discussed restricting sales of Nvidia Corp.’s advanced AI chips. and other U.S. companies on a country-specific basis, people familiar with the matter said, a move that would limit some countries’ artificial intelligence capabilities.

Main events this week:

• Industrial production in the eurozone, Tuesday

• Goldman Sachs, Bank of America, Citigroup earnings, Tuesday

• The Fed’s Mary Daly and Adriana Kugler will speak Tuesday

• Morgan Stanley earnings, Wednesday

• ECB interest rate decision, Thursday

• US retail sales, unemployment claims, industrial production, Thursday

• Fed CEO Austan Goolsbee speaks Thursday

• China’s GDP, Friday

• The Fed’s Christopher Waller and Neel Kashkari will speak Friday

Some of the major moves in the markets:

Stocks

• Futures on the S&P 500 were little changed at 6:51 a.m. London time

• Nasdaq 100 futures were little changed

• The MSCI Asia Pacific Index rose 0.1%

• The MSCI Emerging Markets Index fell 0.4%

• Japan’s Topix rose 1%

• Hong Kong’s Hang Seng fell 2.3%

• The Shanghai Composite fell 1.2%

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.2% to $1.0890

• The Japanese yen rose 0.2% to 149.51 per dollar

• The offshore yuan fell 0.5% to 7.1292 per dollar

• The British pound fell 0.1% to $1.3045

Cryptocurrencies

• Bitcoin fell 0.9% to $65,309.59

• Ether fell 1% to $2,593.82

Bonds

• The yield on ten-year government bonds fell by one basis point to 4.09%

• The German ten-year yield rose by one basis point to 2.27%

• The British ten-year yield rose by three basis points to 4.24%

• The Japanese ten-year yield rose by two basis points to 0.965%

• The Australian ten-year yield fell by two basis points to 4.25%

Raw materials

• Gold fell 0.2% to $2,642.23 an ounce

• West Texas Intermediate crude fell 3.6% to $71.14 per barrel

This story was produced with the help of Bloomberg Automation.

–With help from Shery Ahn, Jason Scott, and Yasutaka Tamura.

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