- Asian Stock Markets:
- Nikkei up 0.2% in slow trade, US stock futures slide
- BOJ meeting marks a busy week of data
- Analysts are looking for tech earnings to beat the street
SYDNEY, April 24 (Reuters) – Asian stocks were mostly lower on Monday in a week of economic data and central bank meetings, along with gains from the tech giants that have kept the S&P 500 afloat so far this year.
Market action was sluggish after Friday’s surprisingly strong business activity surveys, bolstering the case for higher interest rates.
MSCI’s broadest index of Asia Pacific equities outside Japan (.MIAPJ0000PUS) fell 0.4%, while Japan’s Nikkei (.N225) gained 0.2%. Chinese blue chips (.CSI300) fell 0.4%.
Over in Australia, there was some weakness in mining stocks (.AXJO) after Chile scrambles to tighten government control over its lithium industry, which has the world’s largest reserves of the battery metal.
EUROSTOXX 50 futures and FTSE futures were both little changed. S&P 500 futures and Nasdaq futures fell 0.3% ahead of a busy week of earnings.
Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) alone accounted for almost half of the S&P 500’s gains through March, so a lot depends on their prospects.
“We believe that proven companies Microsoft, Amazon and Google should all deliver cloud results this week that will meet and likely exceed Street 1Q’s expectations, despite the recent market turmoil,” said analysts at Wedbush Securities.
“We also believe that a key narrative of tech earnings season will be the AI arms race and each big tech player will update investors on their own AI ambitions/monetization strategy as Redmond competes against Google and other tech Stars is fighting for the AI trophy case.”
The US House of Representatives could vote this week on a Republican plan to raise the debt ceiling in exchange for spending cuts. Weak tax revenues mean the government could run out of money sooner than expected and the risk of default in US credit default swaps has increased.
US wage and economic growth figures due this week are likely to reinforce the case for further tightening. The Atlanta Fed’s influential GDP Now tracker shows that the US economy grew an annualized 2.5% in the first quarter, just slightly slower than the previous quarter.
BOJ GETS A NEW BOSS
Markets are pricing in an 86% chance that the US Federal Reserve will hike rates by a quarter point at its meeting in the first week of May and are fully expecting a similar rate hike from the European Central Bank with some risk of a one-quarter move half point. ,
Central banks in Canada and Sweden meet this week, but most of the attention will be focused on the Bank of Japan for the first meeting, chaired by its new governor, Kazuo Ueda.
Ueda said on Monday that policy easing must continue as inflation still tends to be below 2%.
Only three out of 27 economists polled by Reuters expect the BOJ to start scaling back its yield curve control (YCC) policy anytime soon, but there are reports that the central bank is considering conducting a full review of the impact of its easing.
“The media backdrop suggests you don’t expect any changes to the YCC, but it’s clear the writing is on the wall and there is a risk of a major change at the next meeting,” said Tapas Strickland, NAB’s head of market economy.
In contrast, the governor of Belgium’s central bank warned in an FT article on Monday that investors are underestimating how high borrowing costs will rise in the euro zone.
Policy divergences between Japan and the rest of the developed world have seen the yen weaken steadily in recent weeks, with the euro in particular hitting a six-month high.
The single currency was firm at 147.56 yen on Monday , while the dollar remained at 134.35 .
The euro remained at $1.0980, within sight of its recent yearly high of $1.1075.
A higher dollar and bond yields weighed on gold, which lost 1.2% last week to trade at $1,979 an ounce.
Chicago wheat rose nearly 1% after Russia threatened to pull out of a grain deal that allowed Ukrainian exports, raising concerns about global supplies.
Oil prices also lost ground last week, although proposed OPEC production cuts offer some support.
Brent fell 66 cents to $81.00 a barrel on Monday, while US crude fell 67 cents to $77.20 a barrel.
Reporting by Wayne Cole; Editing by Christopher Cushing
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