By Wayne Cole
SYDNEY (Reuters) – Asian stocks struggled to rally on Monday as super-strong U.S. corporate earnings sucked funds from emerging markets and onto Wall Street, where records fell almost daily.
More than a third of is expected to release quarterly results this week, with headlining Facebook Inc (NASDAQ :), Tesla (NASDAQ 🙂 Inc, Apple Inc (NASDAQ :), Alphabet (NASDAQ 🙂 Inc, Microsoft Corp (NASDAQ 🙂 and Amazon.com (NASDAQ :).
With just over a fifth of the S&P 500 having published, 88% of companies have exceeded the consensus of analysts’ expectations. This is one of the main reasons why global fund managers invested more than $ 900 billion in US funds in the first half of 2021.
Oliver Jones, senior market economist at Capital Economics, noted that U.S. profits are expected to be about 50% higher in 2023 than they were the year immediately before the pandemic, far more than expected in the most other big savings.
“With so much optimism, it seems likely to us that the tailwind of rising earnings forecasts, which have supported the stock market so much over the past year, will fade,” he warned.
Futures on the Nasdaq rose 0.1% at the start of trading, while remaining stable.
As funds flock to Wall Street, Asian markets have been widely snubbed. The largest MSCI index for Asia-Pacific stocks outside of Japan has been trending sideways since March and only rose a fraction on Monday.
rebounded 1.6% at the start of trading, but it was a seven-month low. South Korea KS11> is doing a little better on demand for tech stocks, but little changed on Monday.
The week is also rich in US data which should highlight the outperformance of the economy. Second-quarter gross domestic product is expected to post 8.6% annualized growth, while the Fed’s preferred measure of core inflation is expected to rise 3.7% in June.
The Federal Reserve is meeting on Wednesday, and while no policy changes are expected, President Jerome Powell will likely be in a hurry to clarify what “substantial further progress” on jobs would look like.
“The main message of Fed Chairman Powell’s post-meeting press conference should be consistent with his testimony to Congress in mid-July, when he had reported no rush for the cut,” said Kevin Cummins, NatWest Markets (NYSE 🙂 economist.
“However, it will be a clear reminder to market participants that the countdown to reduction has officially started. “
So far, the bond market has been remarkably serene about the prospect of a possible decline, with US 10-year bond yields falling for four consecutive weeks to stand at 1.28%.
The decline did little to undermine the dollar, in part because European yields fell further amid expectations of continued massive bond purchases from the European Central Bank.
The single currency has been trending down since June and hit a four-month low at $ 1.1750 last week. It was last at $ 1.1770 and was at risk of testing its 2021 low of $ 1.1702.
The dollar also rose slightly against the yen to reach 110.57, but remains below its recent high of 111.62. The fall of the euro took the euro to 92,891, far from its May low of 89,533.
The rising dollar offset lower bond yields to leave gold around $ 1,800 an ounce.
Oil prices have fared better as demand for betting remains strong as the global economy gradually opens up and supply remains tight. [O/R]
was trading 23 cents firmer at $ 74.33 a barrel, while adding 20 cents to $ 72.27.