Asia Stocks to Rise as Earnings Outweigh Bank Woes: Markets Wrap

(Bloomberg) — Equities in Asia were primed to advance on Monday after robust corporate earnings boosted Wall Street at the end of last week as investors awaited news of a bid for First Republic Bank.

Most Read from Bloomberg

Stock futures for Japan and Australia edged higher. Contracts for the Hang Seng Index also advanced, although Hong Kong will be closed for trading, alongside China, Singapore and many countries in Europe to observe May 1 holidays.

US futures were broadly flat in early Asian trading after the S&P 500 rose 0.8% Friday to advance for two consecutive weeks for the first time in a month. The benchmark also posted back-to-back monthly gains for the first time in five months. The CBOE Volatility Index fell below 16 points for the first time since November 2021 as solid corporate earnings boosted sentiment.

The future of First Republic Bank weighed on markets, however. Regulators had asked a group of banks including JPMorgan Chase & Co. and PNC Financial Services Group Inc. to submit bids for the embattled lender by midday Sunday in Washington. Should none materialize, US authorities have the option of taking ownership of the bank.

Currency markets were stable in early Asian trading. Bitcoin traded just below $30,000, holding on to its stellar run this year.

Australia and New Zealand 10-year notes gained, echoing a rally in Treasuries on Friday that pushed yields across the curve lower. The yield on the 10-year Treasury note fell 10 basis points, the biggest one-day drop in more than a month, to 3.42%.

Interest rate decisions will be in focus this week. The Federal Reserve is expected to increase borrowing costs 25 basis points to a range of 5% to 5.25%, a level not seen since 2007. The European Central Bank is also expected to raise its key lending rates by 25 basis points. The Reserve Bank of Australia is forecast to keep interest rates on hold when it meets Tuesday.

“Earnings season is showing the demand in the market, which is a key engine of inflation, is still quite robust,” Hebe Chen, an analyst with IG Markets, said in an interview on Bloomberg Television. The Fed must also play down the chances for rates to fall later this year, “potentially putting a cap on the unrealistic expectations for a rate cut,” she said.

Apple Inc. headlines another busy week of earnings reports that includes Advanced Micro Devices Inc., Ford Motor Co., Qualcomm Inc., Coinbase Global Inc., Block Inc. and Peloton Interactive Inc.

Here are some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 8:07 a.m. Tokyo time. The S&P 500 rose 0.8% Friday
Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.7% Friday
Nikkei 225 futures rose 0.7%
Hang Seng futures rose 1%
S&P/ASX 200 futures rose 0.7%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1012
The Japanese yen was little changed at 136.31 per dollar
The offshore yuan was little changed at 6.9339 per dollar

Cryptocurrencies

Bitcoin rose 0.2% to $29,397.09
Ether was little changed at $1,891.91

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.