Summary:
Asian shares rose on Tuesday, following Wall Street's tech-led gains. Investors applaud strong earnings and declining Treasury yields.
Asian shares opened higher on Tuesday after Wall Street's three major indexes gained overnight with technology stocks leading gains. Investors are cheering a buoyant earning season and falling Treasury yields.
On Monday Japanese shares hit highs not seen since 1990 thanks to strong earnings and offshore demand while European shares, which have lost their lustre since the second quarter, were almost flat
Traders have nearly fully priced in the likelihood that the Fed will keep interest rates unchanged in December, and some have started pricing in rate cuts as soon as March, according to the CME FedWatch tool.
Solid bidding in the $16 billion sale of 20-year Treasury bonds also signalled the optimistic mood. As the current earnings season nears a close, over 80% of S&P 500 companies beat estimates.
Goldman Sachs last week said that investors should not be overly concerned about the weakening outlook for corporate earnings and the EPS for the index will likely rise 5% in 2024.
Estimates for Q4 were revised down by 4% since the start of Oct, but those typically declined by 6% in the months leading up to the start of earnings season since 2004.
The S&P 500 breaching above 4,550 exposes the 4,600 area it hit at the end of July. Further gains are more likely than not given ebbing inflation fears though a short-term correction cannot be ruled out.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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