Equity benchmarks in Hong Kong advanced, along with those in Japan and South Korea, while mainland Chinese equities slipped. Futures for US shares traded mixed after the S&P 500 topped 5,000 — halting a six-day rout — while the Nasdaq 100 rose 1%, with Nvidia Corp. leading gains in big tech. Apple Inc. was named a top pick for 2024 at Bank of America Corp. on optimism over its upcoming results.

Investors are waiting to see if earnings will meet the lofty expectations for artificial intelligence this week when about 180 companies in the S&P 500 — representing over 40% of the gauge’s market capitalisation — are due to report their results. Stakes are high for the “Magnificent Seven” megacaps, whose profits are forecast to rise nearly 40% from a year ago, according to Bloomberg Intelligence. The focus on earnings comes after a rout fueled by geopolitical fears and signals the Federal Reserve will be in no rush to cut rates.

“Yesterday’s relief rally in Asia is likely to extend today,” said Tony Sycamore, a market analyst at IG Australia in Sydney. “However as we approach the business end of the week in the form of mega tech earnings and key macro data, the pace of the gains is expected to slow.”

Treasuries were steady in Asia ahead of a flurry of bond auctions that will test investors’ appetite after yields hit the highest in 2024. Australian and New Zealand bonds gained. 

In Asia, focus returns to China’s role as a major lender to developing nations amid a report the head of its central bank wants creditors engaged in debt restructurings to agree on how to fairly share the burden of relief. Meanwhile, UBS Group AG upgraded Chinese and Hong Kong stocks to overweight, citing resilient earnings despite the nation’s property and macro worries.

Elsewhere, the Bank of Japan is widely expected to leave its benchmark interest rate unchanged on Friday, with investors focusing on any hints of a less dovish tilt as the yen trades around a 34-year low. The Japanese currency briefly gained against the dollar after Japanese Finance Minister Shunichi Suzuki said the environment is in place to intervene in the foreign exchange market if needed.

In corporate news, Sichuan Baicha Baidao Industrial Co., also known as Chabaidao, plunged 10% in its Hong Kong trading debut, indicating diminished demand for shares of companies making hugely popular bubble tea.

Oil nudged higher as traders weighed the next steps between Israel and Iran amid signs of easing hostilities following a tit-for-tat exchange of attacks last week. Gold edged higher after tumbling 2.7% on Monday as haven demand waned.

Earnings boost

Nearly two-thirds of 409 respondents in Bloomberg’s Markets Live Pulse survey said they expect earnings to give the US equity benchmark a boost. That’s the highest vote of confidence for profits since the poll began asking the question in October 2022.

The challenge to S&P 500 returns this earnings season is that companies will have to produce earnings — and outlooks — that support the already elevated multiples, according to Megan Horneman at Verdence Capital Advisors.

Indeed, the stakes are high for America’s technology behemoths to start delivering on artificial intelligence promises with their earnings poised to decelerate, according to Bank of America Corp. strategists.

Microsoft Corp., Alphabet Inc., Meta Platforms Inc. and Tesla Inc. report results this week — kicking off earnings for the so-called Magnificent Seven. With AI seen as the key to future profits, its contributions to the earnings mix is a focus for traders, a BofA team including Ohsung Kwon and Savita Subramanian said.