Synopsis
Asian markets hit record highs on Tuesday, mirroring the rebound in U.S. technology stocks. Investors are now focusing on the upcoming US employment and inflation reports. These crucial economic indicators will likely influence the Federal Reserve’s interest rate decisions. Alphabet Inc. is also raising significant funds through a bond offering, signaling continued investment in the technology sector.
TIL CreationsIn Friday’s consumer price index, economists will look for more evidence that inflation is on a downward trend. Before then, Tuesday’s numbers are expected to show strong retail sales.
Asian stocks rose Tuesday as the rally in U.S. technology stocks accelerated following last week’s selloff linked to concerns over artificial intelligence spending.
THE Nikkei 225 The index continued its election-fueled rally to rise more than 1% to set a new record, while stocks also opened higher in South Korea and Australia. This pushed the MSCI Asia Pacific Index to a record high. The Asian gains came after the S&P 500 climbed to close near a record Monday, as some of the stocks hit hardest during last week’s selloff rebounded.
The dollar held on to its losses and Treasuries held steady as traders prepared for Wednesday’s U.S. jobs report. Gold and silver fell in early trading Tuesday as investors took profits in a volatile market still trying to find a bottom after a historic rout.
The stock’s gains signal an easing of concerns around the AI business that came to a head over the past two weeks, lambasting software companies and casting a pall over big-spending technology companies. As that happens, traders are now bracing for key economic data that could shape expectations for the Federal Reserve’s interest rate move.
“When markets sell off like in some areas of technology, there are often impulsive rallies,” said Sameer Samana of the Wells Fargo Investment Institute. “Time will tell if we need a retest or if enough value has been created.”
In another sign of big spending by tech companies, Alphabet Inc. is set to raise $20 billion through a U.S. dollar bond offering – surpassing the $15 billion expected – while offering investors its first-ever sales in Switzerland and the United Kingdom. The UK deal would include a rare 100-year bond.
Elsewhere, the yen weakened on Tuesday after trading around 156 to the dollar in the final session following Prime Minister Sanae Takaichi’s historic election triumph over the weekend. Brent crude oil rose for a second day on Monday as growing tensions in the Middle East centered on OPEC member Iran added a risk premium to prices. Bitcoin hovered near $70,000.
This week, the focus is on a series of U.S. economic data, including the two most important numbers: employment and inflation.
The jobs report, due Wednesday, is expected to show payrolls increased by 69,000 in January. The unemployment rate is expected to stabilize at 4.4%. The data will also include historical revisions that are expected to show a significant downward adjustment in payrolls over the year to March 2025.
In Friday’s consumer price index, economists will look for more evidence that inflation is on a downward trend. Before then, Tuesday’s numbers are expected to show strong retail sales.
These releases could shape expectations for the Fed’s next interest rate decision. Traders widely expect policymakers to keep rates unchanged when they meet next month, as they did in January when they voted to keep them between 3.5% and 3.75%.
Treasury yields fell Monday after National Economic Council Director Kevin Hassett said U.S. jobs could be expected to decline in coming months due to slowing population growth.
“We think the stabilizing labor market – marked by modest hiring and limited layoffs – should help the Fed stay on course to cut rates once or twice this year, assuming price pressures continue to ease,” said Angelo Kourkafas at Edward Jones. “Lower interest rates should reduce borrowing costs for consumers and businesses, helping to support the economy and business profits. »
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