(Bloomberg) — Asian shares took a breather on Tuesday after seven days of gains, as Li Auto Inc.’s weak earnings report dragged down sentiment. Most of the region’s currencies slipped against the dollar.
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Chinese stocks retreated as traders took profit after a rally that sent the benchmark to overbought levels. Equities in Hong Kong fell, with Li Auto leading losses in the MSCI Asia Pacific index after the company’s first-quarter vehicle sales missed estimates. Stocks in Australia also dropped, while Japanese shares were steady, supported by positive earnings from insurance companies.
“The markets seem lethargic and in need of new inspiration,” said Chris Weston, head of research at Pepperstone Group.
Gold and copper changed hands near their all-time highs and wheat prices surged. The Bloomberg Commodity Spot Index reached its highest level since January 2023 on Monday.
Copper prices breaking out to a record “has been a good sign for further gains since 1959,” said Jason Goepfert, founder of Sundial Capital Research. Historically, “other markets mostly reacted positively to copper breakouts, especially stocks over the next couple of months. Bond prices tended to suffer, as did the U.S. dollar.”
In Asia, China’s economic struggles remain in the spotlight, with fresh data showing there’s little sign of a turnaround in its debt-plagued property sector. Local governments reaped the least revenue in eight years through land sales last month, showing the fiscal strains faced by those authorities who depend on such revenue for a large chunk of their total income.
The yield on 10-year US Treasuries was little changed, while that on Japan’s 10-year debt nudged higher. The Bloomberg Dollar Spot Index gained as investors continue to eye the cautious mood from Federal Reserve officials. Speaking overnight, Cleveland Fed President Loretta Mester joined the ranks of US policy makers suggesting less scope for interest rate cuts than previously expected.
JPMorgan Chase & Co.’s Marko Kolanovic held firm in his gloomy outlook on equities, urging clients not to buy stocks.
That came after Morgan Stanley’s Mike Wilson capitulated on his pessimistic stock view, leaving Kolanovic as the last prominent bear among Wall Street’s megabanks.
Traders’ focus may also turn to Nvidia Corp. — one of the top companies powering the artificial-intelligence frenzy — which is due to report earnings later this week.
“For the market to keep momentum this week, it may come down to just one stock – Nvidia,” said Jay Woods at Freedom Capital Markets. “It sure feels like the hype for this earnings event will be the talk of trading desks and financial media all week.”
Elsewhere, Australia’s central bank resumed a discussion of interest-rate hikes at its May policy meeting before deciding that the case to stand pat was stronger as it aims to avoid “excessive fine tuning.” The Aussie fell as much as 0.3% versus the dollar before paring losses.
In corporate news, Samsung Electronics Co. is replacing the head of its semiconductor arm, appointing a longtime memory chip veteran to spearhead efforts to catch up with SK Hynix Inc. in the booming AI arena.
Crypto prices surged on signs of momentum toward US approval of exchange-traded funds investing directly in second-largest token Ether, a shift from a more downbeat outlook as recently as last week.
Key events this week:
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Fed’s Thomas Barkin, Christopher Waller, John Williams, Raphael Bostic, Susan Collins, Loretta Mester speak, Tuesday
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US existing home sales, Wednesday
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Fed minutes, Wednesday
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Nvidia earnings, Wednesday
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Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, consumer confidence, Thursday
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G-7 finance meeting in Stresa, Italy, May 23-25
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US new home sales, initial jobless claims, Thursday
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Fed’s Raphael Bostic speaks, Thursday
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US durable goods, University of Michigan consumer sentiment, Friday
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Fed’s Christopher Waller speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 1:05 p.m. Tokyo time
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Nasdaq 100 futures were down 0.1%
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Japan’s Topix was little changed
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Australia’s S&P/ASX 200 fell 0.2%
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Hong Kong’s Hang Seng fell 2%
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The Shanghai Composite fell 0.4%
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Euro Stoxx 50 futures fell 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0856
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The Japanese yen fell 0.1% to 156.49 per dollar
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The offshore yuan was little changed at 7.2436 per dollar
Cryptocurrencies
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Bitcoin rose 2.4% to $71,203.76
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Ether rose 5.3% to $3,688.2
Bonds
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The yield on 10-year Treasuries was little changed at 4.45%
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Japan’s 10-year yield was unchanged at 0.975%
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Australia’s 10-year yield advanced two basis points to 4.25%
Commodities
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West Texas Intermediate crude fell 0.6% to $79.34 a barrel
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Spot gold fell 0.4% to $2,414.45 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth and Jason Scott.
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