* Markets prepare for US earnings season
* Investors are optimistic as coronavirus cases increase in the United States
By Wayne Cole
SYDNEY, July 13 (Reuters) – Asian stocks climbed to five-month highs on Monday as investors bet that the profit season in the United States would see most companies beat forecasts as expectations had been up to ‘now lowered by coronavirus blockages.
The largest MSCI index of Asia Pacific stocks outside of Japan rose 1%, after skyrocketing last week thanks to soaring Chinese stocks, which jumped 2% on Monday.
The Japanese Nikkei gained 2% and the South Korean 1.6%. The E-Mini futures for the S&P 500 rose 0.5%, although some US states have reported new record cases of COVID-19, a divergence that shows no signs of stopping.
EUROSTOXX 50 futures contracts added 1.1% and FTSE futures contracts 1%.
“The gloomy news about COVID-19 infection in the United States continues to be summarily ignored in favor of continued optimism about the timeline for the discovery and rapid deployment of an effective vaccine and / or political support increased for asset prices and the US economy, ”said Ray Attrill, FX strategy manager at NAB.
“JP Morgan, Citigroup and Wells Fargo all report on Tuesday and there is an opinion that the bar has been set low enough for them to report almost mandatory results” better than expected “- despite the absence of directives from the many companies. ”
Wednesday sees Goldman Sachs and the New York Bank report, while Thursday sees Netflix and Morgan Stanley.
While bank stocks rose sharply on Friday, they lag behind technology stocks, Bank of America analysts noting that technological outperformance in the past six months has been the highest since the technology bubble of 1999 and the 2008 global financial crisis.
If the S&P 500 were just “technology, healthcare, Amazon, Google,” the index would now be 4,173, they wrote in a note, well above the current level of 3,185. it was made up of everything else, that would be 2,924.
“The central banks are crushing rate expectations, forcing risk-taking in the credit markets,” they added.
Yields on 10-year US bonds approached their record lows last week at 0.569% and held steady at 0.63%.
The very low rates were in turn a boon for unproductive gold which peaked at almost nine years after five consecutive weeks of gains. The metal was last at $ 1,805 an ounce, right next to a high of $ 1,817.17.
The hunt for yield has tended to benefit emerging market currencies and those used for commodities such as the Australian dollar, while weighing on the US dollar.
Against a basket of currencies, the dollar was down to 96.441 on Monday and not far from the June low of 95.714. The dollar was slightly weaker on the yen at 106.88, while the euro held steady at $ 1.1329.
Oil prices fell at the start of trade, although it followed a sharp rise on Friday when the International Energy Agency (IEA) revised up its demand forecasts for 2020.
Brent crude futures fell 29 cents to $ 42.95 a barrel, while US crude fell 30 cents to $ 40.25.
Editing by Richard Pullin and Jacqueline Wong
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