Stocks in Asia advanced Wednesday after US benchmarks wiped out gains in the final half hour of trading, with investors tweaking portfolios after a rally that’s already topped $4 trillion this year.
Shares climbed at the open in Japan, while Australian and South Korean stocks were little changed. Futures pointed to a decline in Hong Kong.
The S&P 500 fell for a third day, after a buying frenzy that’s seen it add almost 10% this quarter. The US equity benchmark is on track to notch five straight months of gains. Now, traders are debating whether the road gets rougher for the rally to keep chugging along as stock valuations remain elevated relative to history.
Japan’s Nikkei 225 is one of few Asian equity benchmarks that are able to match the pace of the US rally — advancing more than 20% this year and on track for one of its best quarters ever. Hong Kong has been unable to fully recover after plunging at the start of the year and is set for a slight decline, while Sydney is set to post a modest gain.
Investors will have to assess many moving parts when looking at potential month-end flows, which includes a holiday shortened week this month, according to Tony Sycamore, a market analyst at IG Australia Pty.
“Typically, rebalancing involves selling the best-performing stock markets, which for March would be Korea, Germany, Japan, and the US, and buying the laggards,” he wrote in a note. “More broadly, this month should, in theory, see outflows from equities and into fixed income, which has underperformed relative to equities.”
Recent advances in China’s equity markets may be tested as major financial institutions release earnings reports, starting with Industrial & Commercial Bank of China Ltd. later on Wednesday.
Also in focus will be Alibaba Group Holding Ltd. after calling off an initial public offering for its Cainiao logistics arm in Hong Kong, shelving a $1 billion-plus deal in a surprise move that underscores its new approach toward rejuvenating a flagging e-commerce empire.
Cocoa Surge
Treasuries steadied in Asian trading after rebounding from session lows on Tuesday following a $67 billion sale of five year-notes. The dollar was little changed.
Cocoa futures surged above an unprecedented $10,000 a metric ton on Tuesday before erasing gains and taking a breather from a historic rally that has seen prices of the key chocolate ingredient double this year.
Oil extended a modest decline after an industry report pointed to a sizable build in US inventories, and wider markets had a weaker tone ahead of the end of the quarter.
Meanwhile, as traders geared up for the Fed’s preferred inflation gauge on Friday — when markets will be closed — they parsed the latest economic readings. US consumer confidence held steady, durable goods orders climbed while home-price growth accelerated at the fastest rate since 2022.
For equities to warrant their gains in recent months, global central banks must ease monetary policy this year and companies have to deliver healthy earnings growth, according to JPMorgan Chase & Co.’s Marko Kolanovic.
Elsewhere, Apple Inc.’s iPhone shipments in China fell about 33% in February from a year earlier, according to official data, extending a slump in demand for the flagship device in its most important overseas market.
