Asian stocks gain as commodities rise: Markets wrap

(Bloomberg) — Asian stocks caught their breath Tuesday after seven days of gains, and a commodity gauge hit a 15-month high. Traders’ focus turns to chipmaker Nvidia Corp’s earnings later in the week.

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While Japanese stocks rose, stocks in Hong Kong, China and Australian stocks fell, sending the MSCI All-Country Index lower in early Asian trading after eight straight days of rise. Gold traded near an all-time high and wheat prices rose. The Bloomberg Commodity Spot Index reached its highest level since January 2023 on Monday.

Trading across financial markets is being shaped by bets on when the Federal Reserve may finally decide to ease monetary policy, as well as views on the US corporate sector and the Chinese economy regaining strength. At the same time, developments in the Middle East have the potential to spark higher risk aversion.

Nvidia – one of the biggest companies fueling the AI ​​craze – is set to report earnings later this week.

“For the market to maintain momentum this week, it may only be down to one stock – Nvidia,” said Jay Woods of Freedom Capital Markets. “The hype around this earnings event is sure to be the talk of the trading desks and financial media all week.”

In Asia, China’s economic difficulties remain in the spotlight, with new data showing little sign of a turnaround in the debt-laden real estate sector. Local governments collected the least revenue in eight years through land sales last month, showing the financial pressures facing those authorities that rely on these revenues for a large portion of their total income.

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The yield on 10-year US Treasury bonds was little changed, while the yield on 10-year Japanese Treasury bonds rose.

Australia’s central bank resumed discussion of raising interest rates at its May policy meeting before deciding that the case for staying status quo was stronger because it aimed to avoid “excessive fine-tuning”.

Speaking overnight, Cleveland Fed President Loretta Mester joined the ranks of US policymakers suggesting there is less room to cut interest rates than previously expected.

In the Middle East, developments in Iran and Saudi Arabia have the potential to shape the course of the crisis-plagued region for years to come. The death of Iranian President Ebrahim Raisi in a helicopter crash has raised questions about who might succeed the country’s supreme leader, Ayatollah Ali Khamenei, who is in his mid-80s. There are also renewed questions about the health of the elderly Saudi monarch.

Main events this week:

  • The Fed’s Thomas Barkin, Christopher Waller, John Williams, Raphael Bostic, Susan Collins and Loretta Mester speak Tuesday.

  • US Existing Home Sales, Wednesday

  • Fed Minutes, Wednesday

  • Nvidia earnings Wednesday

  • Eurozone Global Services Purchasing Managers’ Index (PMI), S&P Global Manufacturing Index, Consumer Confidence, Thursday

  • G7 financial meeting in Stresa, Italy, May 23-25

  • US new home sales and initial unemployment claims, Thursday

  • The Fed’s Rafael Bostic speaks Thursday

  • US Durable Goods, University of Michigan Consumer Confidence, Friday

  • Fed Governor Christopher Waller speaks on Friday

Some key movements in the markets:

Stores

  • S&P 500 futures were little changed as of 10:31 a.m. Tokyo time

  • Nikkei 225 futures rose 0.3%.

  • Japan’s Topix index rose 0.3%.

  • Australia’s S&P/ASX 200 index fell 0.2%.

  • The Hang Seng Index in Hong Kong fell 1%.

  • Shanghai Composite Index fell 0.3%

  • Euro Stoxx 50 futures fell 0.2%

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Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • There was little change in the euro at $1.0860

  • The Japanese yen fell 0.1 percent to 156.48 yen to the dollar

  • There was little change in the yuan in external transactions at 7.2483 to the dollar

Digital currencies

  • Bitcoin rose 2 percent to $70,930.45

  • Ethereum rose 4.4% to $3,655.67

Bonds

Goods

  • West Texas Intermediate crude fell 0.1 percent to $79.72 a barrel

  • Spot gold rose 0.2 percent to $2,429.30 an ounce

This story was produced with assistance from Bloomberg Automation.

–With the help of Rita Nazareth.

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