Stimulus Hopes Generate a Short-Covering Rally in China

The ultra-cheap Asian market is finding some panache

Highlights

• It’s time to ask whether A.I. valuations are overblown

• Risks are still elevated for regional banks and commercial real estate

• ISM employment data was at odds with nonfarm payrolls

• Can cuts cure Canada’s “CCC” economy?

While We Were Sleeping

U.S. equity market futures are little changed but it is clear that the bulls do still have the upper hand. European markets are little changed — Infineon’s move to lower its outlook for semiconductor demand was a bit of a downer (as the PHLX Semiconductor Index retreated -1.1% yesterday and now just up +3.9% for the year).

The ultra-cheap Asian market is finding some panache, led by policy stimulus signs and hopes coming out of China, as the local stock market benchmark jumped an added +1.4% overnight and the YTD losses are starting to be whittled away (good read on page 15 of today’s FT titled Are Chinese Stocks a Value Trade or Trap?). Hong Kong, mind you, slipped back -0.3%. But most of the rest of the region did close in the green (though Japan and India were both pretty flat): Singapore (+0.9%) and Thailand (+0.2%) both up. All in, the Asia-Pacific Index closed at its highest level in over a month (+0.4%).

Bond markets are quiet for a change (ahead of today’s $42 billion auction of 10-year T-notes), with investors having priced out a March Fed cut and now back to bracing for the “higher for longer” rates theme. The DXY dollar index is off -10 pips as it faces stiff resistance at the 100-day trendline. Bitcoin has fallen back -0.6% to $42,896; gold is off -0.2% to $2,033 per ounce; and Brent crude has mustered a +0.4% advance to $78.92 per barrel (all market quotes are time-stamped to 4:30 a.m. EST).