HONG KONG: Asian markets dawdled as the earnings season got underway with the spike in coronavirus cases in some countries raising questions about the economic rebound and made investors worry about valuations.
India’s daily case count exceeded 200,000 for the sixth straight day and Thailand’s plans to resume its crucial tourism sector received a setback from a new surge in coronavirus infections and a sluggish vaccine rollout.
In Japan, Osaka Prefecture was set to ask the central government to declare another state of emergency with Tokyo weighing a request for a similar declaration later this week as they grapple with a rise in infections.
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Japan’s Nikkei 225 index tumbled 1.97%, Australia’s S&P ASX 200 slipped 0.68% but Hong Kong’s Hang Seng index and China’s CSI300 ended nearly unchanged. The MSCI Asia Pacific index retreated 1.34%.
As the earnings season gets underway analysts are wondering if valuations are starting to get stretched.
“Asia, similar to the US, is trading close to fair value but down from the 6% overvaluation at end-January with technology names pulling back and some upgrades in our fair value estimates,” said Morningstar analysts in a quarterly review presentation.
DOLLAR STEADY
US Treasury yields edged up and the dollar was steady but gold weakened after the recent uptick easing 0.3% to $1,769 per ounce. The 10-year yields rose 2 basis points to 1.62%.
China’s central bank held rates as expected at its meeting but there are expectations of looser monetary conditions in Japan and Australia following their minutes of meetings.
“We expect the Reserve Bank of Australia to announce another $100bn extension to its asset purchase programme in June and keep rates on hold until late 2023,” said Ben Udy, Capital Economics analyst.
PERIOD OF INACTION
Their economists also observed that after tweaking a range of policy measures in March, the Bank of Japan will keep policy settings unchanged in April, and that by addressing the side-effects of ultra-loose policy, the BoJ has set the stage for a prolonged period of inaction.
Netflix reports first-quarter results on Tuesday and it is all about numbers. It becomes the first of the FAANG stocks – Facebook, Amazon, Apple, Netflix and Google-parent Alphabet – to report with others following suit in the coming weeks.
Netflix subscriber numbers blew past 200 million last year as the world spent hours locked down at home watching TV. The company has forecast 6 million new subscribers in the last quarter but Wall Street analysts expect it to add more to its 203.7 million subscriber base.
Asia Stocks
- Japan’s Nikkei 225 index tumbled 1.97%
- Australia’s S&P ASX 200 slipped 0.68%
- Hong Kong’s Hang Seng index edges up 0.1%
- China’s CSI300 ended flat
- The MSCI Asia Pacific index retreated 1.34%.
Stock of the day
Food delivery giant Meituan’s shares rose as much as 2.4% and topped the HKEX turnover table after it raised $10 billion in a stock and convertible bonds sale, underscoring strong investor faith in the growth prospects of some Chinese tech firms despite a regulatory clampdown on the sector.
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