Asian Shares to Track Record-Breaking Wall Street: Markets Wrap
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Tokyo futures up over 1%; Hong Kong, Sydney stocks to climb
S&P 500 hits 30th record this year; Nasdaq nears 20,000 mark.
Asian equity benchmarks are set to open higher Tuesday as a rally in several large technology companies drove US stocks to another record.
Tokyo share futures show equities may rise more than 1% in early trading, while stocks in Sydney and Hong Kong are also expected gain. That comes after the S&P 500 hit its 30th record this year, defying concerns about narrow breadth that could make the market more vulnerable to surprises.
The US benchmark index topped 5,470, with Tesla Inc. and Apple Inc. leading gains in megacaps. The Nasdaq 100 came closer to the 20,000 mark as Micron Technology Inc. climbed to a record after some firms raised their targets. Broadcom Inc. jumped over 5%.
Ahead of Wednesday’s holiday in the US, traders geared up for retail-sales data and a slew of Federal Reserve speakers. Treasuries fell Monday amid a flurry of high-grade corporate bond sales that exceeded $21 billion, led by Home Depot Inc.
We believe the S&P 500 can reach 6,000 by year-end as the combination of better earnings and one or two rate cuts is like a turbo booster for stock prices,” said James Demmert at Main Street Research. “The Fed may not need to cut rates this year — but if they do, it will be even more bullish for equities, particularly tech.”
Optimism over a resilient economy, improving corporate earnings and the potential start of rate cuts have pushed equities up about 15% this year, with ebbing inflation and the artificial-intelligence fervor also propeling equities higher. Fed Bank of Philadelphia President Patrick Harker said he sees one rate cut as appropriate for this year based on his current forecast.
While there’s been no shortage of headlines about the latest record highs on the S&P 500, the highs have been less significant as a sign of market strength than as an influence on investor sentiment, according to Tim Hayes at Ned Davis Research.
“As record highs were reached by major benchmarks, breadth has weakened,” he said. “Benchmark records are not confirmed by most markets, sectors and stocks.”
Elsewhere, French stocks rebounded after last week’s tumble. Yet the Stoxx Europe 600 Index was little changed as Citigroup Inc. downgraded the region’s equities, citing “heightened political risks” among other reasons.
In Asia, traders are still digesting China’s disappointing data dump from Monday, which showed the nation’s housing slump deepened in May, triggering new calls for the government to pump cash and credit into the economy. Declines in real estate investment and home prices both gathered pace last month.