(Bloomberg) — Stocks in Asia were mixed after U.S. benchmarks erased gains in the final half-hour of trading, with investors reorganizing their portfolios after a rally that has already surpassed $4 trillion this year.
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Stocks fell at the open in Hong Kong and mainland China, while they rose in Japan and Australia. The recent rise in China's stock markets is likely to be tested as major financial institutions report earnings, most notably Industrial & Commercial Bank of China Ltd. later on Wednesday.
Alibaba Group Holding Ltd. fell in Hong Kong after the company canceled an initial public offering worth more than $1 billion for its logistics arm Cainiao. Chinese electric vehicle giant BYD Co. also fell after reporting 2023 profit that missed estimates.
Meanwhile, Apple Inc.'s iPhone shipments in China fell about 33% in February from a year earlier, according to official data, continuing a decline in demand for the flagship device in its key overseas market.
U.S. stock futures pointed to gains after the S&P 500 fell for a third day. The U.S. stock benchmark is on track to post five straight months of gains, but now traders are debating whether the path will get tougher for the rally to continue moving forward as stock valuations remain high relative to history.
Japan's Nikkei 225 is one of the few Asian stock benchmarks that can keep up with the pace of the U.S. rally – it's up more than 20% this year and on track for one of its best quarters ever. Hong Kong has failed to fully recover after the slump at the start of the year and is expected to see a slight decline in the three months to March, while Sydney is expected to see a slight rise.
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According to Tony Sycamore, a market analyst at IG Australia Pty., investors need to weigh many moving parts when looking at potential month-end flows, including a holiday-shortened week this month.
“Typically, rebalancing involves selling the best-performing stock markets, which include Korea, Germany, Japan and the US in March, and buying the laggards,” he wrote in a note. “Broadly speaking, this month should theoretically see outflows from equities and into fixed income, which have underperformed equities.”
Cocoa rise
Government bonds stabilized in Asian trading, recovering from session lows on Tuesday following a $67 billion sale of five-year bonds. The yen weakened to an intraday low as a hawkish Bank of Japan board member said financial conditions would remain accommodative.
The dollar was marginally stronger against its Group of 10 counterparts, while the offshore yuan was little changed after the People's Bank of China renewed support for the currency.
Chinese industrial companies' profits rose in the first two months of the year, extending an upward streak since August and reinforcing positive signs for the economy.
Cocoa futures rose above an unprecedented $10,000 a tonne on Tuesday before paring gains and taking a breather from a historic rally that has seen prices for the key chocolate ingredient double this year.
Oil prices continued their modest decline after an industry report pointed to a sizeable increase in U.S. inventories, and broader markets took a weaker tone ahead of the end of the quarter. Gold fell but traded near its record high.
As traders prepared for the Fed's preferred inflation indicator on Friday – when markets will be closed – they analyzed the latest economic data. U.S. consumer confidence remained stable, durable goods orders rose, while home price growth accelerated to its fastest pace since 2022.
Global central banks need to ease monetary policy this year and companies need to deliver healthy profit growth for stocks to justify their gains in recent months, according to JPMorgan Chase & Co.'s Marko Kolanovic.
Important events this week:
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The Bank of England will publish the minutes of the Financial Policy Committee on Wednesday
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Eurozone economic confidence, consumer confidence, Wednesday
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Fed Governor Christopher Waller speaks on Wednesday
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UK GDP revision, Thursday
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US University of Michigan Consumer Sentiment, Initial Jobless Claims, GDP, Thursday
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Japan Unemployment, Tokyo CPI, Industrial Production, Retail Sales, Friday
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U.S. Personal Income and Spending PCE Deflator, Friday
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Good Friday. Due to the holidays, stock exchanges in the USA and many other countries are closed. The US federal government is open.
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San Francisco Fed President Mary Daly speaks Friday
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Fed Chairman Jerome Powell speaks on Friday
Some of the key moves in the markets:
Shares
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S&P 500 futures rose 0.2% at 10:26 a.m. Tokyo time
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Nasdaq 100 futures rose 0.2%
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Japan's Topix index rose 0.7%
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Hong Kong's Hang Seng Index fell 0.5%
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China's Shanghai Composite Index fell 0.2%
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Australia's S&P/ASX 200 index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index has barely changed
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The euro was little changed at $1.0826
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The Japanese yen was little changed at 151.66 per dollar
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The offshore yuan was little changed at 7.2508 per dollar
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The Australian dollar fell 0.2% to $0.6522
Cryptocurrencies
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Bitcoin rose 1% to $70,493.7
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Ether rose 1.1% to $3,614.31
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This story was produced with support from Bloomberg Automation.
– With support from Rob Verdonck.
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