SYDNEY- Asian shares started cautiously on Monday in a week packed with economic data and central bank meetings, along with earnings from the tech giants that have kept the S&P 500 afloat so far this year.
Early action was sluggish in the wake of Friday’s surprisingly strong surveys of business activity which reinforced the case for higher interest rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 percent, while Japan’s Nikkei nudged up 0.2 percent.
S&P 500 futures and Nasdaq futures both eased 0.2 percent ahead of a busy week of earnings.
Apple Inc. and Microsoft Corp. alone have accounted for nearly half of the S&P 500’s gains through March, so there is much riding on their outlooks.
“We believe stalwarts Microsoft, Amazon and Google should all deliver cloud results that meet and likely exceed Street 1Q expectations this week despite recent noise in the market,” said analysts at Wedbush Securities.
“We also believe a major narrative of tech earnings season will be the AI arms race and each Big Tech player updating investors on their own AI ambitions/monetization strategy as Redmond battles Google and other tech stalwarts for the AI trophy case.”
The US House of Representatives could this week vote on a Republican plan to raise the debt ceiling in exchange for spending cuts. Weak tax receipts mean the government could run out of money earlier than expected, and the risk of default has seen a rise in US credit default swaps.
Figures on US wages and economic growth due this week will likely reinforce the case for further tightening. The Atlanta Fed’s influential GDP Now tracker has the US economy growing an annualized 2.5 percent in the first quarter, only a shade slower than the previous quarter.
Markets are pricing in an 89 percent chance the Federal Reserve will hike rates by a quarter point at its meeting in the first week of May, and fully expects a similar hike from the European Central Bank with some risk of a half-point move.
Central banks in Canada and Sweden meet this week, but most attention will be on the Bank of Japan for the first meeting chaired by its new governor, Kazuo Ueda. – Reuters
