(Bloomberg) — Asian stocks posted modest gains at the open Tuesday, with attention back on technology shares and the artificial intelligence sector following the surge in Alibaba Group Holding Ltd.’s shares.
Shares in Japan and South Korea rebounded after Monday’s losses while Australia’s declined. Gold extended its gains to a sixth day, its longest winning streak since April 2024. Oil edged up.
The Treasury curve steepened as cash trading resumed following the Labor Day weekend in the US. The yield on Treasury two-year notes inched up one basis point to 3.63% and that on 10-year debt rose three basis points to 4.26%. Japan’s 10-year note futures ticked higher with investors focused on an auction of this tenor later on Tuesday.
After a selloff in technology shares in Wall Street Friday, the record-breaking stock rally faces a pivotal test this month, with jobs numbers, inflation data and the Federal Reserve’s rate call all landing within the next three weeks. Tariff tensions and questions over the Fed’s independence are also compounding the risks in September, historically the weakest month of the year for US markets.
“The bar to derail a Fed rate cut on Sept. 17 appears high,” Deutsche Bank AG economist Peter Sidorov wrote. “But with Fed funds futures now pricing over 140 basis points of easing by the end of 2026, markets are expecting an amount of easing that since the 1980s has only occurred around recessions.”
A gauge tracking emerging-market equities notched its best session in a week amid thin liquidity due to the US holiday, boosted by AI-related stocks in Hong Kong and China.
The MSCI EM Index closed 0.7% higher as Alibaba jumped 19% in Hong Kong — the most in three years — after the Chinese e-commerce giant reported a triple-digit percentage gain in AI-related product revenue as well as a better-than-anticipated 26% jump in sales from the cloud division. The rally marks a break from last week’s broader Asian market decline after a tech selloff hit Wall Street.
What Bloomberg’s Strategists Say:
“JGB traders will be watching the bid-to-cover ratio for the 10-year sale today, with anything below 3.0 seen as weak. The last time the metrics were similarly disappointing was back in May, which coincided with the start of a selloff across the Japanese curve. A repeat would likely trigger a negative read across for G-10 bonds as global curve-steepening themes are refreshed.”
— Mark Cranfield, MLIV macro strategist. Click here for the full analysis.
Another key factor for the markets is the Cboe Volatility Index sitting at 16.12, not far off its 2025 closing low of 14.22.
“The fact that investors are still betting heavily on new lows in volatility, even with VIX at what appears to be a floor, and with markets up sharply from their April lows to all-time highs, should be viewed with caution,” said Jeff Jacobson, a strategist at 22V Research, in a note Monday.
Traders will also be closely monitoring Indonesian markets after stocks tumbled the most in nearly five months on Monday. Political risks have recently flared, with President Prabowo Subianto canceling a China trip after deadly unrest over living costs and inequality. Stress also was evident in the bond market, with yields on the nation’s 10-year government note rising to the highest in almost three weeks.
Meanwhile, President Donald Trump said India offered to cut its tariff rates following the US imposition last week of 50% levies as punishment for its purchases of Russian oil.
In Europe, bonds weakened broadly, with a week to go before a confidence vote that could topple France’s government. The French-German 10-year spread, a key measure of risk, was little changed at 79 basis points. The gauge closed at 82 on Aug. 27, the highest since January.
Longer-maturity bonds may be in for a treacherous September, if history is any guide.
Over the last decade, government bonds globally with maturities of over 10 years posted a median loss of 2% in September, according to data compiled by Bloomberg. That’s the worst monthly performance of the year.
Corporate News:
Nestlé SA dismissed Chief Executive Officer Laurent Freixe after only a year due to an undisclosed workplace affair, extending the management turmoil at the world’s biggest food company that’s known for its conservative corporate culture. Mizuho Financial Group Inc. is aiming to become Asia’s top investment bank by bolstering equity underwriting and M&A advisory, seeking to replicate the headways the firm has made in the US. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:58 a.m. Tokyo time Japan’s Topix rose 0.4% Australia’s S&P/ASX 200 fell 0.2% Euro Stoxx 50 futures rose 0.1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1704 The Japanese yen was little changed at 147.29 per dollar The offshore yuan was little changed at 7.1341 per dollar Cryptocurrencies
Bitcoin rose 0.1% to $109,009.84 Ether rose 0.3% to $4,302.74 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.26% Japan’s 10-year yield advanced 2.5 basis points to 1.625% Australia’s 10-year yield advanced four basis points to 4.35% Commodities
West Texas Intermediate crude rose 1.2% to $64.80 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
-With assistance from Joanna Ossinger and Masaki Kondo.
