(Bloomberg) — Asian stocks advanced as a wave of dip buying combined with growing bets on potential interest-rate cuts.
The MSCI Asia Pacific Index rose 0.6%, as South Korean shares gained 1.4%. Oil steadied after a three-day drop as investors weighed risks to Russian supplies, with US President Donald Trump stepping up his threat to penalize India for buying Moscow’s crude. Indian stocks fell 0.5% and the rupee weakened.
Contracts for the S&P 500 gained 0.2% after the index had its biggest rally since May.
Traders are increasingly pricing in interest rate cuts by the Federal Reserve after Friday’s weak jobs report, which dragged down stocks and sent bond prices sharply higher. Equities have rebounded sharply from their April lows, driven by growing optimism that corporate America can absorb the impact from tariffs and the US economy will be able to avoid a recession.
“It looks like today everyone is following the upward trend in US stocks,” said Hiroshi Namioka, chief strategist at T&D Asset Management. “It’s a bumpy road, and investors are still mindful of the possibility of a recession. But signs of growth, particularly in US tech stocks, are helping sentiment.”
After the jobs data on Friday, the markets were implying a roughly 80% chance of a rate cut at the next Fed meeting. Following last night’s trade, those odds have increased to nearly 95%, wrote Kyle Rodda, a senior market analyst at Capital.com in Melbourne.
There’s a “99% chance” that the Fed will cut rates by 25 basis points in September, Rachana Mehta, a regional fixed income co-head at Maybank Asset Management said in a Bloomberg TV interview.
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.
Tech megacaps led gains Monday, rebounding from recent selling pressure, with Nvidia Corp. and Meta Platforms Inc. each surging at least 3.5%.
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.
In Japan, an auction of 10-year government notes on Tuesday drew weaker demand after poor US employment data last week fueled speculation of an early Fed rate cut, putting downward pressure on yields. The 10-year yields traded 4 basis points lower at 1.465% on Tuesday after the auction.
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.
Meanwhile, Trump also said he would be “substantially raising” the tariff on Indian exports to the US over the Asian nation’s purchases of Russian oil, a move New Delhi slammed as unjustified in an escalating fight between the two major economies.
“Tariffs are going to come back to haunt us on a periodic basis going forward,” said Aidan Yao, senior investment strategist for Asia at Amundi Investment Institute in Hong Kong told Bloomberg TV. “We’re in a very volatile ceasefire, but this is not a credible end to the trade war.”
Corporate News:
Palantir Technologies Inc. reported a 48% increase in revenue for the second quarter to more than $1 billion, citing the “astonishing impact” of artificial intelligence technology on its business. Tesla Inc. approved an interim stock award worth about $30 billion for Chief Executive Officer Elon Musk, a massive payout meant to keep the billionaire’s attention on the automaker as a legal fight over a 2018 pay package drags on. Meanwhile, shipments from Tesla Inc.’s Shanghai factory slipped back into decline on intense competition in China and global trade uncertainties. SoftBank Group Corp. is building up stakes in Nvidia Corp. and Taiwan Semiconductor Manufacturing Co., the latest reflection of Masayoshi Son’s focus on the tools and hardware underpinning artificial intelligence. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 1:41 p.m. Tokyo time Japan’s Topix rose 0.7% Australia’s S&P/ASX 200 rose 1.1% Hong Kong’s Hang Seng rose 0.3% The Shanghai Composite rose 0.5% Euro Stoxx 50 futures rose 0.1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1560 The Japanese yen was unchanged at 147.09 per dollar The offshore yuan was little changed at 7.1844 per dollar Cryptocurrencies
Bitcoin fell 0.5% to $114,222.73 Ether fell 1.4% to $3,648.24 Bonds
The yield on 10-year Treasuries was little changed at 4.20% Japan’s 10-year yield declined 3.5 basis points to 1.465% Australia’s 10-year yield declined 10 basis points to 4.21% Commodities
West Texas Intermediate crude fell 0.2% to $66.16 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
-With assistance from Alice French, Abhishek Vishnoi and Joanne Wong.
