Asia Shares Rise With US After Strong Tech Results: Markets Wrap

This content was published on February 2, 2024 - 23:43 February 2, 2024 - 23:43

(Bloomberg) -- The stock market is poised for extended gains this week, as gains from major technology companies and strong jobs reports support corporate earnings expectations.

Meta Platform Inc. And as stocks neared the 5,000 level in the S&P 500 and the Nasdaq 100, Amazon.com Inc. It grew by 1.7%. Economic optimism outweighed expectations that the Federal Reserve would do no harm. The two-year Treasury yield jumped 16 basis points to 4.36 percent. The dollar hit its highest level since December.

"Today's employment report casts doubt on the 'soft landing' narrative," said David Donabedian of CIBC Private Wealth US.

According to Neil Dutta of Renaissance Macro Research, strong labor productivity growth means unit labor costs are under control, providing a good backdrop for company profitability. With such economic strength, it's "hard to be too complacent," said Brett Kenwell of eToro. Larry Tenterelli of Blue Chip Daily Trend Report saw the data as "a very alarming sign for the economy" and added, "We're buying the near-term weakness in stocks."

"With many hedged against a recession that will never happen in 2023, there will be another year without a recession," said Chris Zaccarelli of the Independent Advisory Alliance.

Nonfarm payrolls rose by 353,000 last month after an upward revision from the previous two months. The unemployment rate remained at 3.7 percent. Hourly wages rose from last month, the biggest increase since March 2022. According to various data, US consumer confidence has increased significantly.

While signs of a stronger economy may bode well for US businesses, the data reinforces the view that the Federal Reserve will delay the start of interest rate cuts.

Alex McGrath, of Northend Private Wealth, said: "I think we're officially saying goodbye to the March rate cut and possibly the May rate cut.

Federal Reserve Governor Michelle Bowman said she expects inflation to fall further if interest rates remain at their current levels, but officials have said it is too early to consider cutting interest rates.

May's deal, which halved the chance of a quarter-point rate cut based on the Federal Reserve's meeting in March, did not fully implement the rate cuts implemented a month earlier.

"A price cut in March seems highly unlikely," said Glenmead's Jason Pride. "This year there may be 2 to 3 cuts during the summer."

Chief Asset Management's Seema Shah said January was not the only time for the job market. Past months appear to be stronger than initial estimates.

"The big surprise in employment and wage growth means that the March rate cut will now have to be cancelled, and the May rate cut may be frozen for now," he said.

After the Fed's decision Wednesday, Chairman Jerome Powell said a rate cut was unlikely at its next meeting in March. He will appear on CBS News' "60 Minutes" to discuss inflation concerns, expected interest rates and banking practices, among other topics, the network said.

Tiffany Wilding Pacific Investment Management Co. He said Powell's decision to reverse the Fed's desire to cut interest rates in March seemed "very timely."

Charles Schwab Richard Flynn's Friday numbers may be another reason for the Federal Reserve to delay the first interest rate hike until the summer, but if the economy is on a comfortable path, this could be a good thing.

"Why is he in such a hurry?" he asked.

National's Mark Hackett said strong market growth was at record levels and expectations of a change in the Federal Reserve's outlook had "failed to accelerate".

"Investors on the sidelines are starting to throw in the towel on what should be a tailwind for the market as they continue to buy stocks after the corporate earnings season," Hackett said.

Shares rose on Friday, as the company's capitalization grew, sparking a sharp market rally from below.

Shares of Meta rose 20 percent to an all-time high after another impressive earnings report rattled shareholders. The update boosted the company's market capitalization to $197 billion. In 2022 and Amazon.com Inc. It beat the posted profit of $190 billion.

Bank of America's Michael Hartnett said the rapid rise in tech stocks was reminiscent of the dot-com era and reflected expectations that the economy would grow despite tighter monetary policy.

75% of investors said they expected a soft landing, while 20% said they expected no landing. However, while a soft landing favors many stocks, the so-called "Magnificent Seven" accounted for 45 percent of the S&P 500's performance in January, reflecting a "rest/bubble bias."

In other corporate news, Apple blamed losses on its China business, which investors blamed for the downturn. ExxonMobil Corp and Chevron Corp beat earnings estimates as better-than-expected shale production mitigated the impact of lower crude prices. The regional bank index bounced back after two days of decline.

Some of the major market activities are:

Share

• The S&P 500 index was up 1.1 percent at 4 p.m. New York time.
• The Nasdaq 100 index rose 1.7 percent.
• The Dow Jones Industrial Average rose 0.3 percent.
• The MSCI world index rose 0.6%

Coin

• The Bloomberg Dollar Spot Index rose 0.6 percent.
• The euro fell 0.7% to $1.0793.
• The pound fell 0.8% to $1.2637.
• The Japanese yen fell 1.3 percent to $148.30.

crypto currency

• Bitcoin fell 0.3 percent to $42,945.79.
• Ether fell 0.3% to $2,297.85.

Prisoner

• The 10-year Treasury yield rose 14 basis points to 4.02 percent.
• The yield on Germany's 10-year bond rose nine basis points to 2.24 percent.
• The UK's 10-year bond yield rose 17 basis points to 3.92 percent.

Planting

• West Texas Intermediate crude fell 2.3 percent to $72.14 a barrel.
• Gold prices on the market fell 0.9 percent to $2,036.72 per ounce.

This story was produced with the help of Bloomberg Automation.

-- with assistance from Michael McKenzie, Subrata Patnaik and Carter Johnson.

©2024 Bloomberg LP

Dawn Bloomberg: Asia 01/30/2024