This is CNBC’s live blog covering Asia-Pacific markets.
Asia-Pacific markets were set to fall Tuesday as the U.S. market took a breather following a rally sparked by optimism over the Federal Reserve’s interest rate stance at its latest meeting.
Sam Stovall, chief investment strategist at CFRA Research, noted that equities have gotten expensive, with the S&P now trading at a 33% premium to its average price-to-earnings ratio over the last 20 years.
“We’re coming off of a post-FOMC high,” he told CNBC, referring to the U.S. Federal Reserve’s Federal Open Market Committee meeting last week. “The market is getting more and more vulnerable to a market decline or a pullback in prices.”
Investors in Asia also await economic data out of Southeast Asia, including Singapore’s manufacturing output and Thailand’s trade balance. Japan’s service producer price index for February is also expected later in the day.
In Australia, the S&P/ASX 200 fell 0.4% at start of the day, after coming close to reaching its all-time high on Monday.
Japan’s Nikkei 225 was also set to fall, with the futures contract in Chicago at 40,235 and its counterpart in Osaka at 40,180 against the index’s last close of 40414.12.
However, futures for Hong Kong’s Hang Seng index stood at 16,497, pointing to a slightly stronger open compared to the HSI’s close of 16,473.64.
Overnight in the U.S., all three major indexes lost ground, with the Dow Jones Industrial Average down 0.41% and the S&P 500 dipping 0.31%, while the Nasdaq Composite was 0.27% lower.
— CNBC’s Lisa Kailai Han and Pia Singh contributed to this report
As high inflation appears to be waning, a long-neglected set of stocks stands to benefit from consumers settling into a new normal spending pattern, according to HSBC.
The investment bank named two stocks that will benefit from the emerging trend — one of which uses AI to enhance its products. The bank also expects the stock to rise by more than 85% over the next 12 months.
Chipmaker Nvidia has been in the spotlight over the past year, especially since its shares logged an astronomical 240% rise in 2023, on the back of the artificial intelligence buzz.
However, one investor is steering clear, saying the stock looks far too expensive.
“Even if some may say it’s not as expensive because earnings have gone up dramatically … when you see stocks start to triple over a year and a half to become one of the top on the S&P 500, you need to be cautious,” said David Dietze, managing principal and senior portfolio strategist at Peapack Private Wealth Management, which has over $10 billion of assets under management and administration.
Instead, he named the sectors — and four stocks — to consider buying instead.
Strong U.S. economic data and an artificial intelligence-powered rally have boosted stocks so far this year, and equities are likely to remain at their current levels into year-end, according to UBS.
“Our base-case scenario is for a soft landing in the US, in which economic growth moderates, inflation recedes further, and interest rates fall,” the bank wrote. “We expect this to create a supportive backdrop for equity markets. However, we think a lot of good news is already priced in at the index level.”
On the other hand, UBS also cautioned against near-term choppiness in the market that might materialize as traders adjust their expectations for the Federal Reserve’s policy easing.
— Lisa Kailai Han
Most investors and the Federal Reserve’s dot plot anticipate four rate cuts this year, but not Morgan Stanley’s global director of research.
“We continue to expect a June start, followed by cuts at the Sep, Nov, and Dec meetings,” the bank wrote. “Despite a higher long-run rate, the long-run growth projection was unchanged at 1.8%, indicating the Fed sees recent supply-side factors driving growth higher as temporary.”
Morgan Stanley research added that small-cap stocks could feel the pressure if U.S. Treasury yields continue to increase.
“While large caps have exhibited declining rate sensitivity over the past few months, small caps’ correlation with rates remains meaningfully negative, suggesting to us that they are more at risk than large-caps if UST yields move higher,” the bank wrote.
— Lisa Kailai Han
Stocks whose performance is tied to the price of bitcoin surged with the cryptocurrency on Monday.
MicroStrategy, which trades as proxy for the price of bitcoin, surged 14%, while Coinbase advanced 9%. The mining sector got a lift from bitcoin too, with Marathon Digital and Riot Platforms up 4% and 5%, respectively. CleanSpark rose 11% and Cipher Mining gained 12%.
Bitcoin gained 6% to trade at $69,720.82, according to Coin Metrics. It had been in correction mode for the past week, after hitting an all-time high of $73,797.68 on March 14. Last Wednesday, it slid to as low as about $60,800.