Asian Stocks Rise After Dip-Buyers Fuel US Rally: Markets Wrap
Treasuries were little changed while a gauge of the dollar dropped 0.1%.
Asian stocks rose at the open after a wave of dip buying and optimism about interest-rate cuts helped the S&P 500 post its biggest rally since May.
Stocks in Japan, Australia and South Korea all gained and the broader MSCI Asia Pacific Index rose 0.4%. Oil steadied after a three-day drop as investors weighed risks to Russian supplies, with US President Donald Trump stepping up his threat to penalise India for buying Moscow’s crude. Treasuries were little changed while a gauge of the dollar dropped 0.1%.
US stocks climbed on Monday as investors balanced robust corporate earnings with growing expectations for a Federal Reserve rate cut, following weaker-than-expected jobs data. Equities have rebounded sharply from their April lows, driven by growing investor optimism that corporate America can absorb the impact of the recent wave of tariffs.
“This week is a quiet one on the economic calendar, so traders may be taking their cues from earnings, along with any new tariff and trade developments,” said Chris Larkin at E*Trade from Morgan Stanley.
Tech megacaps led gains Monday, rebounding from recent selling pressure, with Nvidia Corp. and Meta Platforms Inc. each surging at least 3.5%. Action in the bond market was fairly muted as the US is set to auction $125 billion of new three-, 10- and 30-year debt this week. The dollar was little changed.
S&P 500 earnings are crushing second-quarter expectations — up 9.1%, triple the pre-season forecast and the strongest beat rate since 2021, according to data compiled by Bloomberg Intelligence.
Monday’s jump in stocks prompted a comment from Trump, who said it was a “Good day in the Stock Market” and there will be many more days like this.
“America is very rich again, and stronger than ever before,” Trump wrote on his Truth Social platform Monday.
Still, a chorus of stock market prognosticators at some of Wall Street’s biggest firms are warning clients to prepare for a pullback as sky-high equity valuations slam into souring economic data.
On Monday, Morgan Stanley, Deutsche Bank AG and Evercore ISI all cautioned that the S&P 500 Index is due for a near-term drop in the weeks and months ahead. The predictions come after a furious rally from April’s lows that propelled the gauge to levels it has never seen before.
Separately, Fed San Francisco President Mary Daly said the time is nearing for rate cuts given mounting evidence that the job market is softening and there are no signs of persistent tariff-driven inflation, Reuters reported.
“I was willing to wait another cycle, but I can’t wait forever,” Daly said of the Fed’s decision last week.
On the tariff front, the European Union is expecting Trump to announce executive actions this week to formalize the bloc’s lower levies for cars and grant exemptions from levies for some industrial goods such as aviation parts, according to people familiar with the matter. Meanwhile, the Swiss government said it is determined to win over Washington after last week’s shock announcement of 39% levies on exports to America.
“Our base case remains that US tariffs will eventually settle around 15%. While this would be the highest since the 1930s, and six times higher than when Trump returned to office, we do not expect it to cause a recession or end the equity bull market,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
Elsewhere, Beijing is bracing for more heavy rain just a week after deadly floods killed at least 44 people. Hong Kong’s observatory also issued a rain alert for Tuesday.
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:15 a.m. Tokyo time
Hang Seng futures were little changed
Japan’s Topix rose 0.3%
Australia’s S&P/ASX 200 rose 0.9%
Euro Stoxx 50 futures rose 1.3%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.1% to $1.1586
The Japanese yen rose 0.2% to 146.77 per dollar
The offshore yuan was little changed at 7.1800 per dollar
Cryptocurrencies
Bitcoin rose 0.2% to $115,003.64
Ether was little changed at $3,703.06
Bonds
The yield on 10-year Treasuries was little changed at 4.19%
Japan’s 10-year yield declined 1.5 basis points to 1.485%
Australia’s 10-year yield declined 11 basis points to 4.20%
Commodities
West Texas Intermediate crude was little changed
Spot gold rose 0.1% to $3,377.49 an ounce
