(Bloomberg) — Most Asian shares were set to follow Wall Street higher as traders prepare for the US election and key economic data that will set the stage for the next Federal Reserve decision. Japan stocks may tread water as traders assess the political outlook.
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Futures pointed to gains in Hong Kong and Sydney, while Tokyo shares looked steady as Prime Minister Shigeru Ishiba vowed to restore stability after the ruling coalition failed to win a majority in Japan’s weekend election. Most major groups in the S&P 500 gained at the start of the busiest week for corporate earnings, though energy shares joined a slide in oil.
US markets seemed to embrace the potential prospect of Donald Trump returning to the White House after his high-profile event in New York Sunday. Trump Media & Technology Group Corp. soared 22% as retail traders touted the stock, which has traded like a proxy for sentiment of his perceived chances of winning the presidency. Crypto companies surged, with Bitcoin rising past $70,000 for the first time since June in early Asian trading.
A victory for Trump would be more beneficial for stocks and Bitcoin relative to his Democratic opponent, while a Kamala Harris presidency would bring slightly more relief to housing costs, according to a Bloomberg Markets Live Pulse survey. Some 38% of respondents see equities accelerating a year from now under the Republican candidate, versus 13% under the Democrat.
“Markets have been extremely active over the past month as traders have juiced up the already ebullient scenario baked into equity valuations, adding improved odds of a Republican sweep to the list of goodies discounted,” said Lisa Shalett at Morgan Stanley Wealth Management.
The S&P 500 rose 0.3%. The Nasdaq 100 was little changed. The Dow Jones Industrial Average gained 0.6%. The Russell 2000 of small caps climbed 1.6%. In late hours, Ford Motor Co. dropped after trimming its profit forecast.
Bonds fell amid weak demand for a pair of US note sales. Treasury 10-year yields advanced three basis points to 4.27%. Oil rose in early Asian trading after tumbling on Monday as Israel limited Iran strikes to military targets.
Japan’s Ishiba indicated he intends to continue on as prime minister and seek to form an administration even after his gamble on an early election failed. The country’s stocks climbed Monday, in part due to anticipation that a weaker government may unleash more spending to boost the economy.
The yen was steady early Tuesday after falling as much as 1% following the result. The currency has now given up all its gains since the Bank of Japan increased interest rates in late July, raising the risk that authorities may wade back into the market as the political uncertainty clouds the rate trajectory.
The Biden administration finalized restrictions on investments by US individuals and companies into advanced technology in China, including semiconductors, quantum computing and artificial intelligence.
Election, Earnings
In the US, Callie Cox at Ritholtz Wealth Management says pre-election jitters still haven’t shown up in the stock market. The S&P 500 hasn’t had a 1% up or down day this month. If that continues to be the case, it will be the first October without a move that big since 2017, she said. It’d also be the first October of an election year without a 1% move since 1968.
“We’re heading into a busy two weeks,” Cox said. “The election conversation will be the loudest, but the packed slate of earnings and economic data could be what markets care about the most. And the results could be noisy, especially from the jobs side.”
A week before the Fed gathers to reflect on the appropriate tempo of rates cuts, data is set to show underlying resilience in the US economy and a temporary hiccup in jobs growth. Investors are also awaiting results from firms accounting for nearly 42% of the S&P 500’s market capitalization, including several big techs like Apple Inc., Microsoft Corp. and Meta Platforms Inc.
“This week’s megacap tech earnings and jobs data will provide plenty of potential fuel for near-term market momentum, but it remains to be seen whether investors will want to sit on their hands until after next week’s election, especially given the volatility around the past two,” said Chris Larkin at E*Trade from Morgan Stanley.
Equities sold off the week before the 2016 and 2020 elections and rallied sharply after them, he noted.
To Saira Malik at Nuveen, it is critical to remain focused on long-term investment goals and attentive to the broader economic backdrop and company fundamentals, as election-driven volatility has historically been short-lived.
“With that in mind, corporate earnings, inflation and the direction of interest rates should continue to be the structural drivers of financial markets,” she said. “This was evident in the recent backup in US Treasury yields after they bottomed in mid-September following the Fed’s rate cut. Since then, the uptick in yields, paired with underlying fundamentals, may have created another attractive entry point for one of our favored fixed-income sectors.”
Corporate Highlights:
Apple Inc., heralding a “new era” for its devices, started rolling out its first set of Apple Intelligence features and introduced a new 24-inch iMac desktop with an AI-focused M4 processor.
Facebook owner Meta Platforms Inc. is working on developing a search engine that crawls the web for information to provide to people using its AI chatbot, the Information reported.
McDonald’s Corp. sales plummeted following news of E. coli infections linked to the chain’s Quarter Pounders.
Boeing Co. launched a nearly $19 billion share sale, one of the largest ever by a public company, to address the troubled planemaker’s liquidity needs and stave off a potential credit rating downgrade to junk.
Estée Lauder Cos. has picked longtime executive Stéphane de La Faverie to take over as chief executive officer, the Wall Street Journal reported, citing people familiar with the matter.
Volkswagen AG plans to close at least three factories, eliminate thousands of jobs and slash wages for tens of thousands of German workers as Europe’s biggest automaker tries to halt its tailspin.
The fate of Johnson & Johnson’s latest push to use bankruptcy courts to end thousands of cancer lawsuits tied to its iconic baby powder now hinges on a high-stakes trial in January.
Key events this week:
US job openings, Conference Board consumer confidence, Tuesday
Alphabet earnings, Tuesday
Eurozone consumer confidence, GDP, Wednesday
US GDP, ADP employment, pending home sales, Wednesday
Meta Platforms, Microsoft earnings, Wednesday
US Treasury Department holds quarterly refunding announcement of bond-auction plans, Wednesday
China Manufacturing and non-manufacturing PMI, Thursday
Bank of Japan rate decision, Thursday
Eurozone CPI, unemployment, Thursday
US personal income, spending and PCE inflation data, initial jobless claims, Thursday
Amazon, Apple earnings, Thursday
China Caixin manufacturing PMI, Friday
US employment, ISM manufacturing, Friday
Some of the main moves in markets:
Stocks
Hang Seng futures rose 0.7% as of 7:20 a.m. Tokyo time
S&P/ASX 200 futures rose 0.4%
Nikkei 225 futures fell 0.1%
S&P 500 futures were little changed
Currencies
The euro was little changed at $1.0814
The Japanese yen was little changed at 153.28 per dollar
The ofshore yuan was little changed at 7.1446 per dollar
Cryptocurrencies
Bitcoin rose 0.4% to $69,870.01
Ether rose 2.2% to $2,572.73
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
