Asian Stocks Poised to Follow Wall Street’s Tech Surge: Market Overview

Asian Equities Set for Gains Following US Tech Rally

Asian equities are positioned for early gains following a robust rally in the world’s top tech stocks, which propelled US and global shares to new heights. This optimism comes ahead of important inflation data scheduled for release on Thursday.

Wall Street and Global Markets Surge

Equity futures for Japan, Australia, and Hong Kong saw an upswing, mirroring the positive momentum from Wall Street on Wednesday. The S&P 500 and Nasdaq 100 both climbed over 1%, marking new record levels. The S&P 500 extended its winning streak to seven consecutive sessions, the longest since November, driving a global equities index to an all-time high. The gains were significantly boosted by last-minute trading surges in tech giants like Nvidia Corp. and Apple Inc. Notably, Apple announced plans to increase device shipments by 10% after a challenging 2023.

Market Stability and Treasury Movements

Treasuries remained stable post an impressive $39 billion sale of 10-year bonds, with yields marginally dipping to 4.28%. Market swaps are predicting two Federal Reserve rate cuts in 2024, potentially starting as early as September. An index tracking dollar strength declined on Wednesday, while the yen remained steady early Thursday, following a drop against the dollar the previous day.

Federal Reserve's Stance

As Wall Street anticipated the upcoming consumer-price index, Fed Chair Jerome Powell informed Congress that inflation doesn't need to fall below 2% for rate cuts to begin, though he emphasized that more work remains. He highlighted a noticeable cooling in the labor market and reassured that commercial real estate is not posing a financial stability threat. Kohl Guha from Evercore commented that the Fed's risk assessment could lead to a rate cut in September, contingent on supportive incoming data.

Bank of England's Position

Bank of England Chief Economist Huw Pill noted that the timing of a rate cut remains unclear, leading traders to reduce expectations for an August cut.

US Inflation and Market Calm

Despite a flood of data, including Powell’s testimony, CPI/PPI reports, and the beginning of earnings season, markets remained calm. Core CPI, excluding food and energy, is expected to rise by 0.2% in June, continuing a trend of smaller gains that could make the pace more acceptable to Fed officials. Bloomberg Economics’ Anna Wong suggested that a favorable CPI report would boost the Fed’s confidence in the inflation trajectory, setting the stage for potential rate cuts in September.

Economic Reports in Asia

Asia is anticipating a slew of economic reports, including consumer confidence data from Thailand, machine orders from Japan, and monetary policy decisions from Malaysia and South Korea. Additionally, China might release new money supply and lending figures soon. Investors are also keen on the implications of China's tightened rules on short selling and high-frequency trading, aimed at curbing improper arbitrage and enhancing market stability.

Commodity Market Movements

Oil prices inched higher early Thursday, while gold remained steady after gaining for two consecutive sessions. Key events like US CPI data, initial jobless claims, and speeches from Fed’s Raphael Bostic and Alberto Musalem are on the radar. The US will also see significant earnings reports from financial giants such as Citigroup, JPMorgan, and Wells Fargo on Friday.

Market Moves Snapshot

The Nikkei 225 futures rose by 1.3%, Hang Seng futures by 0.6%, and S&P/ASX 200 futures by 0.9%, while S&P 500 futures showed little change. In currencies, the Bloomberg Dollar Spot Index fell by 0.1%, with minimal changes in the euro, yen, and offshore yuan against the dollar. On the cryptocurrency front, Bitcoin rose by 0.6% to $57,742.26, and Ether by 0.4% to $3,106.46. Spot gold prices saw little movement, whereas West Texas Intermediate crude edged up by 0.3% to $82.38 per barrel.