Asian stock markets predominantly advanced on Tuesday, following a rebound in US equities. Japan’s benchmark Nikkei 225 index rose 0.3% to 37,552.16, despite the country’s manufacturing activity contracting for the eleventh consecutive month. The sentiment indicator for manufacturing activity stood at 49.9, just below the break-even point of 50 that separates expansion from contraction. The Japanese yen weakened further, hitting a fresh 34-year low against the US dollar.
In Hong Kong, the Hang Seng index jumped 1.6% to 16,771.17, while the Shanghai Composite index in China slipped 0.8% to 3,019.64. Australia’s S&P/ASX 200 climbed 0.4% to 7,683.50, while South Korea’s Kospi dropped 0.2% to 2,624.73.
On Monday, the S&P 500 index in the US gained 0.5% to 5,010.60, recovering more than a quarter of its losses from the previous week. The Dow Jones Industrial Average added 0.7% to 38,239.98, and the Nasdaq composite jumped 1.1% to 15,451.31. The rally was broad-based, with most sectors and stocks on Wall Street posting gains.
Technology stocks led the rebound in the S&P 500, bouncing back from their worst week since the COVID-19 crash of 2020. Nvidia leaped 4.4%, and Alphabet climbed 1.4% as Treasury yields stabilized in the bond market. Bank stocks also performed well following encouraging profit reports. Truist Financial rallied 3.4% after its earnings for the start of the year exceeded analysts’ expectations.
However, Tesla dropped 3.4% after announcing further price cuts over the weekend. The electric vehicle company’s stock has declined by more than 40% this year and is expected to report its first-quarter results later in the day.
This week marks a crucial period for earnings reports, with roughly 30% of the companies in the S&P 500 scheduled to release their financial results for the year’s first three months. This includes companies known as the “Magnificent Seven,” such as Tesla and Alphabet. Strategists Ohsung Kwon and Savita Subramanian of BofA Global Research predict that the growth differential between the Magnificent Seven and the rest of the S&P 500 should narrow by the end of the year.
Verizon Communications kicked off this week’s earnings reports by disclosing a decline in profit that was less severe than analysts had anticipated. The company cited price increases and other measures to support its revenue. Verizon’s stock initially gained but later swung to a loss of 4.7% after the company reported weaker-than-expected revenue for the first quarter and maintained its full-year profit forecast.
Companies are facing increased pressure to deliver strong earnings and revenue due to the limited prospect of interest rate cuts in the near term. Top officials at the Federal Reserve warned last week that high interest rates might persist for a longer period to curb inflation. This has dampened financial markets’ hopes for rate cuts this year.
In oil trading, US benchmark crude picked up 16 cents to $82.06 per barrel. Brent crude, the international standard, gained 18 cents to $87.18 per barrel. The US dollar slipped against the Japanese yen and the euro.
