Asian shares took a breather on Tuesday following seven consecutive days of gains, as sentiment was dampened by Li Auto Inc.’s disappointing earnings report. The region’s currencies mostly weakened against the dollar amidst this backdrop.
Chinese stocks retreated as profit-taking ensued after a recent rally, pushing the benchmark into overbought territory. Equities in Hong Kong also declined, with Li Auto leading losses in the MSCI Asia Pacific index due to its first-quarter vehicle sales missing estimates. Meanwhile, stocks in Australia dropped, while Japanese shares remained steady, buoyed by positive earnings from insurance firms.
Chris Weston, head of research at Pepperstone Group, remarked, “The markets seem lethargic and in need of new inspiration.”
Gold and copper hovered near their all-time highs, while wheat prices surged. The Bloomberg Commodity Spot Index reached its highest level since January 2023 on Monday.
Jason Goepfert, founder of Sundial Capital Research, noted that copper prices breaking out to a record have historically signaled further market gains, particularly for stocks over the next few months.
In China, economic struggles persist, with fresh data indicating no turnaround in the debt-laden property sector. Local governments faced significant fiscal strains as land sales revenue hit an eight-year low last month.
US Treasury yields remained relatively stable, with the Bloomberg Dollar Spot Index gaining traction amid cautious remarks from Federal Reserve officials. Cleveland Fed President Loretta Mester echoed sentiments of limited scope for interest rate cuts.
Marko Kolanovic of JPMorgan Chase & Co. maintained a pessimistic outlook on equities, advising against stock purchases. However, Mike Wilson of Morgan Stanley recently shifted his stance, leaving Kolanovic as the lone bear among major Wall Street banks.
Attention may now turn to Nvidia Corp., set to report earnings later in the week. Jay Woods of Freedom Capital Markets emphasized the significance of Nvidia’s performance, suggesting it could dictate market momentum.
In corporate developments, Samsung Electronics Co. announced changes in its semiconductor leadership, aiming to compete with SK Hynix Inc. in the burgeoning AI sector.
Crypto prices surged amid indications of progress toward US approval of exchange-traded funds investing in Ether, signaling a shift from a more pessimistic outlook just last week.
