Mike Dolan talks about the future outlook for the US and global markets
On Tuesday, Netflix will begin updating weeks of Big Tech earnings in the U.S. as Wall Street stocks hit record highs. Chinese stocks recorded losses early in the new year, and the Bank of Japan remains on course.
Streaming entertainment giant Netflix is expected to report 11% revenue growth in 2023, and the company's stock has risen more than 40% in the past year, more than half of the big tech companies and digital megacaps. That said, it's still twice as much as the S&P 500.
But with investors now focused on next year's outlook, Netflix is hoping for a flurry of Big Tech updates. Tesla and Intel will report later this week, and Apple and Microsoft MSFT.O next week.
S&P 500 futures were unchanged near Monday's new record ahead of the bell.
However, Asia remained the main market mover on Tuesday, with the surprising divergence in stock performance between China and Japan captivating many.
Alarming official measures to stabilize stock prices after deflating New Year's losses in Shanghai and Hong Kong compounded the whopping 30% underperformance of these indexes against global benchmarks over the past year. Following the report, Chinese stocks finally found their footing on Tuesday.
China's Cabinet announced on Monday that it will take strong and effective measures to stabilize market confidence.
And today, Bloomberg News reported, citing unnamed sources, that policymakers are using about 2 trillion yuan (2,790 yuan) from offshore accounts, mainly those of state-owned enterprises, to fund stock purchases through a partnership between China and Hong Kong's stock exchanges. It was reported that they are trying to mobilize $1 billion.
Shanghai rose 0.5% after hitting a four-year low, the blue-chip CSI300 rose 0.4% and Hong Kong's Hang Seng rose 2.6% to close at a two-month high.
However, any measures to stabilize the market will not be enough to address the underlying economic funk and real estate bust plaguing domestic and international investors already reeling from deepening geopolitical rifts and investment restraints. This is in contrast to the overwhelming action.
Donald Trump is in pole position to win the Republican nomination to run for the White House again this year, and the US-China trade and tariff war that defined relations with China during the last presidential term It has heightened speculation about the risks of reopening.
This week, fresh disappointment over the failure of the People's Bank of China to cut rates further has added to concerns, especially as many believe this reluctance is aimed at preventing another fall in the yuan.
The yuan rose to its highest level in weeks following reports of increased market support on Tuesday.
But at least some overseas portfolios, and even domestic Chinese money, are becoming more and more of an alternative to a tech-dependent Asia and a magnet for regional “friendship hubs” as geopolitical rifts become increasingly polarized. , has been heading to Japan in recent months.
And ignoring this year's contrasting 10% boom in the Nikkei stock average suggests a reluctance to “normalize” negative interest rate policy amid declining core inflation, which the Bank of Japan still aims to maintain at 2%. It appears to be.
The Bank of Japan left policy on hold after a two-day meeting on Tuesday, but there were signs it could tighten further this year if it was confident wage growth was assured.
“If we receive further evidence that the virtuous cycle of wage inflation is increasing, we will consider the possibility of continuing the various measures we have taken under the large-scale economic stimulus package,'' Bank of Japan Governor Kazuo Ueda said.
This caused the yen to rise slightly and halt the Nikkei Stock Average, which ended the day little changed. The dollar generally declined.
Back on Wall Street, U.S. Treasury yields rose again. Especially ahead of another week of massive bond sales, with about $60 billion in two-year bonds on Tuesday.
As Fed officials enter a blackout period ahead of their next policy meeting this month, the pricing of Fed futures is slowly absorbing this year's rebound from the agency over expectations of excessive easing. The chance of another rate cut in March is now just under 50%, even though 130 basis points of easing is still included for the rest of the year.
Elsewhere, Bitcoin fell to a seven-week low and fell below $40,000 for the first time since the launch of 11 spot Bitcoin exchange-traded funds on January 11. It has now fallen more than 20% from its peak at the time of the announcement. .
Here are the key diary items that could give direction to US markets later on Tuesday:
* U.S. Corporate Revenues: Netflix, Texas Instruments, GE, Verizon, Halliburton, Lockheed Martin, Johnson & Johnson, P&G, Paccar, Invesco, DR Horton, Intuitive Surgical, Baker Hughes, Steel Dynamics, 3M, Synchrony
*Richmond Fed's January Business Survey, Philadelphia Fed's January Services Sector Survey
*U.S. Treasury sells 12-month notes in $60 billion 2-year bond auction
(Written by Mike Dolan; Edited by Ed Osmond; mike.dolan@thomsonreuters.com)
