Asian equities advanced, led by Japanese shares and tech stocks, with traders looking for clues of any breakthrough in negotiations in Washington to avert a US default.

Share Market Live

NSE

An Asian equity gauge rose for a second day with Japan’s Topix index climbing 0.5 percent at the open, heading for the highest close since 1990.

Hong Kong stocks jumped more than 1 percent following a 4 percent gain in the Nasdaq Golden Dragon China Index on Monday when filings showed money manager Michael Burry boosted his bullish bets on e-commerce giants JD.com Inc. and Alibaba Group Holding Ltd. China is slated to publish a range of economic data including industrial production and retail sales.

Solid fundamentals and expectations for structural changes “justify a bullish stance” on Japan’s equities, Goldman Sachs Group Inc. said.

A still dovish bias by the Bank of Japan is also positive for Japanese equities and “earnings have been increasing relative to other jurisdictions,” said Chris Weston, head of research at Pepperstone Group Ltd. “There’s a lot working for it at the moment from a technical and fundamental perspective,” he said on Bloomberg Television. “We still like the case that’s going on in Japan right now.”

South Korean equities also rallied, supported by chip stocks on the potential merge between Kioxia Holdings Corp. and Western Digital Corp. Australian stocks declined.

Also Read: Oil edges higher with US seeking crude for strategic reserves

US equity futures edged lower before a meeting between President Joe Biden and House Speaker Kevin McCarthy Tuesday. The US stock market gained Monday amid mixed signals sent by both factions in the debt-ceiling talks. Treasury Secretary Janet Yellen reiterated her department may run out of cash as soon as June 1 unless Congress raises or suspends the federal debt limit.

The dollar and Treasuries were both little changed in early trading in Asia, while Australian and New Zealand bonds opened lower. The Aussie was flat following Reserve Bank of Australia minutes that showed officials weighed the risk of upside surprises to inflation amid a tight labor market in their surprise decision to hike rates this month.

Investors are monitoring signs the move by China’s central bank to inject more long-term liquidity into the financial system for the sixth month may finally deliver a post-pandemic boost to economic growth.

More Volatility

UBS Private Wealth Management expects to see more volatility in the markets, especially on the short-end of the Treasury curve, as deadline approaches on the debt-ceiling dispute. “If you’re someone who has cash on the sideline, right now we are recommending that you go ahead and you lock in those improved bond yields,” financial adviser Sarah Ponczek said on Bloomberg Television.

Meanwhile, data showed New York manufacturing slid the most since April 2020. This week’s figures will likely underscore more economic weakness, emboldening the Federal Reserve’s dovish voices even though inflation has failed to reassure, according to Anna Wong at Bloomberg Economics.

JPMorgan Chase & Co.’s Marko Kolanovic joined a chorus of Wall Street strategists Monday in warning that the US debt-ceiling impasse is yet another headwind threatening the outlook for equity markets. Morgan Stanley’s Mike Wilson delivered a similar warning on the debt-ceiling deadline, noting the bank’s clients said the issue is unlikely to be resolved without some near-term volatility.

Also Read: Wake Up Call: Bulls march on as Nifty 50 closes in on an all-time high

First Published:May 16, 2023 7:46 AM IST