Most Asian equity benchmarks were poised to gain on Wednesday as a surge in chipmakers drove US stocks to yet another record-breaking session on Wall Street.
Futures pointed to increases for shares in Tokyo and Hong Kong, while Australian equities may open steady. US traders pushed the S&P 500 closer to the historic 5,500 mark, betting the potential for Federal Reserve rate cuts will keep fuelling the tech industry. Treasuries climbed Tuesday as traders piled into a USD13 billion sale of 20-year Treasuries.
Nvidia Corp. became the world’s most-valuable company — topping Microsoft Corp. — to extend this year’s record-breaking surge. A bullish analyst call projected the firm at the heart of the artificial-intelligence boom will hit nearly USD5 trillion in value in the coming year — from about USD3.3 trillion.
“You have to give the management team, I think, an enormous amount of credit,” said Brian Mulberry, client portfolio manager at Zacks Investment Management. “They have caught each wave of innovation in hardware perfectly well.”
Wall Street waded through mixed economic data that showed US industrial production increased, helped by a broad-based pickup in factory output. Separately, retail sales barely rose and prior months were revised lower. A chorus of Fed officials emphasized the need for more evidence of cooling inflation before lowering rates.
“Investors should lean toward the glass-half-full view, but recognize macroeconomic conditions, as well as the nuances across corporate profits, consumers, and incoming economic data may evolve in ways not fully discounted in asset prices at the moment,” said Anthony Saglimbene at Ameriprise.
In Asia, traders will be watching whether the buying frenzy for Chinese government debt will continue after sovereign bond futures reached a record closing high Tuesday. The benchmark 10-year sovereign bond yield lingered near the lowest level in more than two decades as mixed economic data prompted investors to take refuge in haven assets.
Meanwhile, Bank of Japan Governor Kazuo Ueda on Tuesday told parliament he was keeping the door open to a possible interest rate increase in July. The central bank boss is defying market scepticism over the potential for such action after the bank said it would take another big step toward quantitative tightening next month via a cut in its bond buying.
Another Record
On the eve of Wednesday’s US holiday, the S&P 500 hit its 31st all-time high of 2024. And with each record, that concentration has tightened even more. The so-called Magnificent Seven companies have contributed more than 60% to the index’s return this year.
Bank of America Corp.’s institutional clients piled into US equities for the second week in a row, led by technology and social media shares, strategists including Jill Carey Hall wrote in a note to clients.
Separately, a BofA survey showed that global investors are likely to keep pumping money into record-hitting stock markets.
Answering a question about the asset class that would benefit most from a reallocation of money-market funds, 32% of respondents opted for US stocks. Another 19% said the cash would go into global equities, while a quarter of the respondents indicated they would buy government bonds.
In commodities, oil held Tuesday’s gains after it rose to the highest in more than a month as risk-on sentiment bolstered broader global markets. West Texas Intermediate had climbed 1.5% to settle above USD81 a barrel, reaching the highest closing price in seven weeks. Elsewhere, gold was little changed. – Bloomberg
