Asian Futures Buoyed by Wall Street Earnings Boost: Markets Wrap

(Bloomberg) — Asian stocks were primed to climb Tuesday after US shares rose on robust corporate profits and signs of easing tensions between Washington and Beijing.

Equity-index futures for Japan and Hong Kong pointed to gains while Australia opened higher. That came after the S&P 500 and the Nasdaq 100 both rose more than 1% Monday. A gauge of US-listed Chinese companies advanced 2.4%, its best showing in a week. Treasuries and the dollar also climbed. Gold extended gains in early Asian trading, even as some warned about a potential bubble in the precious metal.

Monday capped the best two-session gain for the S&P 500 since June with around 85% of the firms in the index that have reported so far beating profit estimates. The moves signaled that cautious optimism is returning to the stock market, as solid third-quarter earnings help ease worries amid the ongoing US government shutdown.

“Thank God for earnings season,” said Callie Cox at Ritholtz Wealth Management. Given the US government shutdown, analysts have been deprived of data for weeks, leading to “panic around headlines,” she said.

Sentiment was also buoyed by expectations the trade war will de-escalate as the US and China return to the negotiating table. President Donald Trump reiterated his threat to follow through on a tariff hike on Chinese goods “if there isn’t a deal” by Nov. 1, but stressed plans to meet President Xi Jinping next week.

Earlier this month, markets were roiled as Trump raised the prospect of a sky-high tariff rate, citing China’s “hostile” export controls. Soybean futures rallied Monday, with growers holding out hope that Trump will make a deal with China to restart stalled American exports.

Separately, Trump signed an agreement with visiting Australian Prime Minister Anthony Albanese to boost access to critical minerals and rare earths, as the US looks to reduce reliance on Chinese supplies.

After being delayed by the US government shutdown, the Bureau of Labor Statistics will release the September consumer price index on Friday. The data, originally slated for Oct. 15, will give Federal Reserve officials a critical piece of information on inflation ahead of their Oct. 30 meeting.

Economists in a Bloomberg survey forecast the core CPI, which excludes food and fuel for a better snapshot of underlying inflation, to have climbed 0.3% for a third straight month as higher import duties continue to gradually filter through to consumers. The projected monthly gain will keep the annual core CPI at 3.1%.

“September core CPI likely moderated slightly due to cooling services prices offsetting additional tariff passthrough into goods prices,” said Oscar Munoz at TD Securities. “Energy prices likely boosted headline CPI.”

Friday’s inflation data may take on greater importance due to the government shutdown-driven data drought, said Rick Gardner at RGA Investments. He still sees a Fed cut in October and noted that a key test will be big tech earnings, with investors looking for clarity on how spending on artificial intelligence is leading to profitability.

“We are seeing the typical seasonal volatility in October, but the recent swings have been relatively shallow by historical standards, as the buy-the-dip mentality appears to be in play,” Gardner said.

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 8:25 a.m. Tokyo time Hang Seng futures rose 1.4% Australia’s S&P/ASX 200 rose 0.5% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1645 The Japanese yen was little changed at 150.74 per dollar The offshore yuan was little changed at 7.1227 per dollar The Australian dollar was little changed at $0.6517 Cryptocurrencies

Bitcoin fell 0.4% to $110,734.83 Ether fell 0.3% to $3,988.26 Bonds

Australia’s 10-year yield declined three basis points to 4.13% Commodities

West Texas Intermediate crude was little changed Spot gold rose 0.2% to $4,364.32 an ounce This story was produced with the assistance of Bloomberg Automation.

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