SYDNEY, April 24 (Reuters) – Asian stocks were mostly down on Monday in a week filled with economic data and central bank meetings, as well as earnings from tech giants that held the S&P steady. 500 afloat so far this year.
Market action was sluggish in the wake of Friday’s surprisingly strong business activity polls, which bolstered the case for higher interest rates.
MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.4%, while the Japanese Nikkei (.N225) rose 0.2%. Chinese blue chips (.CSI300) fell 0.4%.
In Australia, there was some weakness in mining stocks (.AXJO) after Chile decided to tighten state control over its lithium industry, which has the world’s largest reserves of battery metal.
EUROSTOXX 50 and FTSE futures were little changed. S&P 500 and Nasdaq futures fell 0.3% ahead of a busy earnings week.
Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) alone accounted for nearly half of the S&P 500’s gains through March, so their outlook depends a lot.
“We believe the Microsoft, Amazon and Google mainstays should all deliver cloud results that meet and likely exceed Street 1Q expectations this week despite recent market noise,” Wedbush Securities analysts said.
“We also believe that a major narrative of tech earnings season will be the AI arms race and that each Big Tech player will inform investors of their own AI monetization ambitions/strategy as Redmond battles Google and other tech stalwarts for the AI trophy.”
The US House of Representatives could vote this week on a Republican plan to raise the debt ceiling in exchange for spending cuts. Weak tax revenues mean the government could run out of money sooner than expected, and the risk of default has led to an increase in credit default swaps in the United States.
US wage and economic growth figures due this week will likely strengthen the case for further tightening. The Atlanta Fed’s influential tracker GDP Now says the US economy grew 2.5% annualized in the first quarter, slightly slower than the previous quarter.
BOJ HAS A NEW BOSS
Markets are pricing in an 86% chance of the Federal Reserve raising rates by a quarter point at its meeting in the first week of May, and fully expecting a similar hike from the European Central Bank. with a risk of movement of half a point. ,
The central banks of Canada and Sweden are meeting this week, but most attention will be on the Bank of Japan for the first meeting chaired by its new governor, Kazuo Ueda.
Ueda said on Monday that the policy easing should continue as inflation was still below 2% in trend terms.
Only three of 27 economists polled by Reuters expect the BOJ to start scaling back its yield curve control (YCC) policy soon, but there are reports that the central bank is planning a full review of the policy. impact of its relaxation.
“The media backdrop suggests we don’t expect changes from YCC, but clearly the writing is on the wall and the risk is of a more substantial change at the next meeting,” Tapas Strickland said. , Head of Market Economics at NAB.
By contrast, the head of Belgium’s central bank warned in an FT article on Monday that investors are underestimating rising borrowing costs in the euro zone.
The policy divergence between Japan and the rest of the developed world has seen the yen weaken steadily over the past few weeks, with the euro in particular hitting a six-month high.
The single currency was firm at 147.56 yen on Monday, while the dollar held steady at 134.35.
The Euro held steady at $1.0980, in view of its recent 1-year high at $1.1075.
Rising dollar and bond yields have been a drag on gold, which lost 1.2% last week and last stood at $1,979 an ounce.
Chicago wheat gained nearly 1% after Russia threatened to end a grain deal allowing Ukrainian exports, raising global supply concerns.
Oil prices also lost ground last week, although planned OPEC production cuts offer some support.
Brent fell 66 cents on Monday to $81.00 a barrel, while U.S. crude fell 67 cents to $77.20 a barrel.
Reporting by Wayne Cole; Editing by Christopher Cushing
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