Asian Futures Buoyed by Wall Street Earnings Boost: Markets Wrap

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(Bloomberg) — Asian stocks were primed to climb Tuesday after US shares rose on robust corporate profits and signs of easing tensions between Washington and Beijing.

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Equity futures for Japan, Hong Kong and Australia all pointed to gains after the S&P 500 and the Nasdaq 100 both rose more than 1% Monday. A gauge of US-listed Chinese companies climbed 2.4%, its best showing in a week, after data showed that China’s economy grew more than expected in the third-quarter.

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The moves were a sign cautious optimism is creeping back into the US stock market as companies report solid third-quarter earnings. Monday capped the best two-session gain for the S&P 500 since June with around 85% of the firms in the index that have reported so far beating profit estimates. 

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“Thank God for earnings season,” said Callie Cox at Ritholtz Wealth Management. Given the US government shutdown, “analysts have been deprived of data for weeks,” leading to “panic around headlines,” she said.

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Treasuries and the dollar also climbed Monday. Gold extended gains in early Asia trading, even as some warned about a potential bubble in the precious metal.

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Sentiment was also buoyed by expectations the trade war will de-escalate as the US and China return to the negotiating table. President Donald Trump reiterated his threat to follow through on a tariff hike on Chinese goods “if there isn’t a deal” by Nov. 1, but stressed plans to meet President Xi Jinping next week.

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Earlier this month, markets were roiled as Trump raised the prospect of a sky-high tariff rate, citing China’s “hostile” export controls. Soybean futures rallied Monday, with growers holding out hope that Trump will make a deal with China to restart stalled American exports.

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Separately, Trump signed an agreement with visiting Australian Prime Minister Anthony Albanese to boost access to critical minerals and rare earths, as the US looks to reduce reliance on Chinese supplies.

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In Asia, data set for release Tuesday include exports for South Korea, machine tool orders for Japan and export orders for Taiwan. Markets are closed in India.

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Inflation Data

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After being delayed by the US government shutdown, the Bureau of Labor Statistics will release the September consumer price index on Friday. The data, originally slated for Oct. 15, will give Federal Reserve officials a critical piece of information on inflation ahead of their policy meeting the following week.

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Economists in a Bloomberg survey forecast the core CPI, which excludes food and fuel for a better snapshot of underlying inflation, to have climbed 0.3% for a third straight month as higher import duties continue to gradually filter through to consumers. The projected monthly gain will keep the annual core CPI at 3.1%.

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“September core CPI likely moderated slightly due to cooling services prices offsetting additional tariff passthrough into goods prices. Energy prices likely boosted headline CPI,” said Oscar Munoz at TD Securities.