Asian Stocks to Rise After Wall Street Win Streak: Markets Wrap

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(Bloomberg) — Most Asian stocks are poised to rise in early trading Monday after Wall Street ended last week at new highs.

Australian shares opened higher, with stock futures in Japan and mainland China also pointing to gains. US futures rose after the S&P 500 posted a sixth straight weekly gain, its best streak this year after a string of corporate results and signs that the world’s largest economy remains strong. Hong Kong futures point lower.

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Traders will be watching China closely ahead of an expected 20 basis point cut in key one- and five-year loan rates on Monday. The cut comes as investors have increasing doubts about a fleeting rebound in Chinese stocks after a set of stimulus measures.

“How much further easing will impact stocks in China, Hong Kong and the yuan is up for debate, as market participants may feel a sense of policy fatigue,” said Chris Weston, head of research at Pepperstone Group in Melbourne.

Oil stabilized in early trading after Israel vowed retaliation against Iran following a precision Hezbollah drone attack targeting the private residence of Prime Minister Benjamin Netanyahu. Crude oil fell 8.4% last week, the largest weekly decline in a year, as the United States revived its efforts to end the conflict in the Middle East and as Chinese demand for oil declined.

“Netanyahu’s impending failure heightens geopolitical tensions,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. However, prices indicate that the risks of energy supply disruptions are minimal, with oil traders more concerned about cuts in demand forecasts from the International Energy Agency and OPEC.

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The potential escalation in the conflict comes as finance ministers and central bank heads meet in Washington this week for the annual meeting of the International Monetary Fund and World Bank. The meeting is overshadowed by the fierce war between Russia and Ukraine and the swinging US presidential elections, which present completely different economic results to the world.

Elsewhere in Asia, Malaysian politicians are bracing for protests after pledging to remove fuel subsidies from next year, which also threatens to spark inflation. Traders will also be watching the Indonesian rupiah closely after the country’s new president, Prabowo Subianto, confirmed that Sri Mulyani Indrawati would remain as finance minister, a sign of policy continuity in Southeast Asia’s largest economy.

Indrawati’s reappointment to the Prabowo administration “should be viewed favorably by markets regarding Indonesia’s financial consolidation narrative in the medium term,” Barclays strategists led by Themistocles Viotakis wrote in a note to clients.

In US earnings this week, Tesla Inc. faces… Questions about its production targets and regulatory challenges after the Cybercab’s much-publicized unveiling failed to stimulate investors and allay concerns about its recent vehicle sales.

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Boeing will also have to calm investors who are increasingly concerned about production delays, depleted financial resources and labor strife. The striking workers are scheduled to vote on October 23 to ratify a tentative agreement on a new contract reached by the company and their union at the weekend, including a 35% wage increase spread over four years.

Investors are preparing for the US elections in about two weeks, with the odds leaning towards Donald Trump winning the White House and Republicans taking control of Congress. Traders have already begun increasing bets on assets that boomed in the wake of the former president’s 2016 win, and are now looking to influence proposed policies including raising trade tariffs.

“The clearest expression of the risks of Trump’s tariffs remains long on the US dollar against the Mexican peso, the Chinese yuan and the euro,” Pepperstone’s Weston said. While polls point to a tighter race than betting markets are indicating, “for some, Trump’s implied lead may be difficult to ignore and may lead to increased hedging of tariff risks during the week.”

Some key movements in the markets:

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Stocks

• S&P 500 futures rose 0.1% as of 8:26 a.m. Tokyo time
• Australia’s S&P/ASX 200 rose 0.8%.
• Hang Seng futures fell 0.4%
• Nikkei 225 futures rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• There was little change in the euro at $1.0868
• There was little change in the Japanese yen at 149.55 to the dollar
• There was little change in the yuan in external transactions at 7.1175 to the dollar
• The Australian dollar rose 0.1 percent to $0.6713

Cryptocurrencies

• Bitcoin rose 0.6% to $69,158.07
• Ethereum rose 1.5% to $2,752.89

Bonds

• The 10-year Australian bond yield was little changed at 4.30%.

Goods

• There was little change in West Texas Intermediate crude
• There was little change in spot gold

This story was produced with assistance from Bloomberg Automation.

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