Stocks Rally With Asia Nearing Record on AI Trade: Markets Wrap
(Bloomberg) — Stocks rallied, with Asian shares climbing toward all-time highs, on optimism around the artificial intelligence trade and stronger-than-expected earnings from megacap tech companies. The yen briefly spiked higher.
MSCI’s Asian equities index climbed 2.1% to within touching distance of its all-time high set on Feb. 27, which was just before the US-Israel war on Iran began. Gauges in South Korea and Taiwan both advanced more than 4.5%. Chipmakers advanced with Taiwan Semiconductor Manufacturing Co. jumping 6.6% and SK Hynix Inc. surging 11%.
Futures for the S&P 500 and the Nasdaq 100 also gained after the Wall Street gauges closed at new highs on Friday on earnings from major tech companies including Apple Inc. European shares were also primed for gains at the open.
Brent crude whipsawed — initially falling 2.4%, then erasing those losses before trading just above $107 a barrel. The fluctuations came after President Donald Trump said the US would begin guiding ships not involved in the Iran conflict through the Strait of Hormuz from Monday. However, a senior Iranian official said Tehran would consider any US interference in the Strait a ceasefire breach, according to an AFP report.
“Markets are currently performing well because of this AI-driven trade or AI-driven hype,” said Dilin Wu, a strategist at Pepperstone Group. “But this geopolitical upheaval, and also the high oil price, are always a constraint. So I would be cautiously optimistic on the Asian market in general.”
Global equities have surged for a month as traders mostly set aside concerns about the economic fallout from the Middle East hostilities, with signs of corporate resilience driving US stocks to their best month since 2020. Efforts to turn a fragile ceasefire into lasting peace combined and signs of US economic strength sent the S&P 500 to its fifth consecutive week of gains.
The yen suddenly jumped as much as 0.8% against the dollar, capturing the attention of traders who remain on high alert after last week’s intervention by Japanese authorities to bolster the currency. The yen then pared gains to trade 0.2% stronger on the day at 156.74 to the US currency.
“It will be worth paying attention to the 157 level in USD/JPY as the exchange rate has struggled twice just above that level post the reported intervention,” said David Forrester, a senior strategist in Singapore at Credit Agricole.
In other corners of the market, gold edged lower to around $4,600 an ounce, while silver traded around $75.25 an ounce. Bitcoin led cryptocurrencies higher, rising 1% to about $80,000. There’s no cash trading of US Treasuries until New York opens due to holidays in Tokyo and London. Mainland China is also closed.
The S&P 500 Index ended April at highs with about 81% of the benchmark’s companies having beat first-quarter earnings estimates, according to data compiled by Bloomberg. Emerging market equities notched a fresh record high toward the end of April while Asian shares have also recouped their war-driven losses.
“The market is being very patient with this level of uncertainty because it is focused on the other side of the conflict, which may be too optimistic,” said Joe Gilbert, a portfolio manager at Integrity Asset Management. “The economic damage being done will be more materially felt in the next month.”
What Bloomberg Strategists Say…
Conflicting reports are leaving traders unclear on the role of the US Navy which is reported to be acting in a coordination process for countries, insurance companies and shipping organizations. This appears to be some way from physically protecting ships.
— Mark Cranfield, MLIV. For full analysis, click here.
In geopolitical news, Trump described discussions with Tehran as “very positive” after it received Washington’s response to its latest proposal to end the war. Steps to guide neutral ships out through the Strait of Hormuz could pave the way for smoother energy flows from the Middle East after a near-full blockade for two months.
Iran’s proposal called for a complete end to the conflict within 30 days along with guarantees against renewed strikes, the semi-official Tasnim News Agency reported. The plan reiterated Tehran’s earlier demands, including that US forces withdraw from near Iran, a maritime blockade be lifted, sanctions removed and reparations paid, it said.
“The devil is always in the detail, but is a positive signal as it shows both parties are willing to find common ground,” said Rodrigo Catril, a strategist at National Australia Bank Ltd. in Sydney. Whether the positive sentiment lasts “is hard to tell. We have been here before,” he said.
Corporate News:
GameStop Corp. is proposing to buy eBay Inc. for about $56 billion in cash and stock, a bold attempt by Ryan Cohen to take over a storied e-commerce name several times larger. Thyssenkrupp AG said it and Jindal Steel International agreed to pause talks about the Indian company acquiring a stake in its steel unit. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 6:50 a.m. London time Nasdaq 100 futures rose 0.4% The MSCI Asia Pacific Index rose 2.1% The MSCI Emerging Markets Index rose 3.1% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng rose 1.5% Euro Stoxx 50 futures rose 0.3% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1730 The Japanese yen rose 0.1% to 156.79 per dollar The offshore yuan rose 0.2% to 6.8201 per dollar The British pound was little changed at $1.3591 Cryptocurrencies
Bitcoin rose 1.4% to $80,002.21 Ether rose 2% to $2,376.36 Bonds
Australia’s 10-year yield declined four basis points to 4.98% Commodities
Spot gold fell 0.4% to $4,595.04 an ounce West Texas Intermediate crude fell 1% to $100.93 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess and Bernadette Toh.
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