Asia Set for Muted Open; US Bond Sales in Focus: Markets Wrap
(Bloomberg) — Stocks were poised for a muted open in Asia after the S&P 500 nudged higher. Wall Street saw another busy session of bond sales as issuers looked to borrow before key economic data later this week.
Futures for equity benchmarks in Sydney and Hong Kong edged up, with those for Tokyo little changed. The S&P 500 advanced even after consumer confidence fell for the first time in four months, while the Golden Dragon index of US-listed Chinese shares jumped in its fifth day of gains. Treasuries were mixed after a $42 billion auction of seven-year notes and a heavy slate of new corporate debt. Australian 10-year yields rose in early trading.
Investors are contending with an erosion in expectations for how much the Federal Reserve will lower rates and an onslaught of new corporate issuance that has given yield-seeking investors ample alternatives. Traders no longer expect the Fed to cut rates by more than 75 basis points in 2024, bringing their view in line with what policymakers have indicated as the likeliest outcome.
“We continue to recommend investors act soon to lock in currently attractive bond yields,” said Solita Marcelli at UBS Global Wealth Management. “We particularly like the five-year duration segment of quality bonds, as this part of the yield curve offers the best combination of high yields, stability, and sensitivity to falling interest-rate expectations.”
Traders refrained from making big bets ahead of Thursday’s inflation data and a parade of central bank speakers. In New Zealand, policymakers are likely to keep interest rates on hold on Wednesday.
Shorter-term Treasuries outperformed longer ones. US megacaps were mixed, with Apple Inc. up and Nvidia Corp. down. Chevron Corp. and Hess Corp. slipped after Exxon Mobil Corp. said it’s considering a move that could break up the companies’ $53 billion merger and increase its share of Guyana’s giant offshore oil reserves. Bitcoin hovered near $57,000. Oil was bolstered by pockets of strength in physical crude markets.
The global economy has a growing chance of pulling off a soft landing, finance chiefs said in a draft of the G-20’s closing statement at this week’s meeting in Brazil, citing faster-than-expected disinflation as one of the upside risks. Meanwhile, Goldman Sachs Group Inc. Chief Executive Officer David Solomon said softer spending by consumers calls into question expectations that the US economy will avoid a recession.
Fed Governor Michelle Bowman repeated her expectation that inflation will continue to decline further with interest rates held at their current level — but said it’s too soon to begin rate cuts — joining a raft of officials stressing they’re in no rush to lower borrowing costs.
The personal consumption expenditures price index will likely validate that stance and possibly further diminish market expectations for a rate cut in the coming months. The gauge could be the next short-term catalyst for the market, as investors are looking for additional data to help confirm if inflation is truly re-accelerating, according to Yung-Yu Ma at BMO Wealth Management.
“This is a ‘teflon’ stock market, which has shown a remarkable ability to shake off bad news and focus on what is positive,” he said. “Nothing bad has been able to stick to the markets for long – such as upside surprises in inflation data and delayed Fed rate cut expectations.”
S&P 500 companies are headed for their highest quarterly earnings beat rate since the fourth quarter of 2021, according to data compiled by Bloomberg Intelligence strategists Gina Martin Adams and Wendy Soong. With more than 90% of S&P 500 companies having reported results, the gauge is on track for 7.7% year-on-year earnings per share growth, blowing past the pre-season forecast for 1.2%.
Key Events This Week:
Some of the main moves in markets:
Stocks
Currencies
Cryptocurrencies
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
More stories like this are available on bloomberg.com
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Published: 28 Feb 2024, 04:46 AM IST
Original Source