Asia stocks rise as ECB appears set to cut rates; softer labor market fuels hopes the Fed might follow suit

Lim Hui Jie

Asia-Pacific stocks rose Thursday as investors expect the European Central Bank to cut rates, with softer U.S. labor market data fueling hopes that the Fed might follow suit, further boosting market sentiment.

The ECB this week appears set to cut borrowing costs for the euro area for the first time since September 2019.

Japan’s Nikkei 225 climbed 0.91%, approaching the 39,000 mark for the first time in two weeks, while the broad-based Topix gained 0.61%.

In Australia, the S&P/ASX 200 inched up 0.7%, as the country’s exports fell to its lowest level since Dec 2021.

Hong Kong’s Hang Seng index jumped 0.7%, paring earlier gains while the CSI 300 on mainland China was marginally above the flatline.

South Korea’s markets were closed for a public holiday.

Overnight in the U.S., Nvidia led major tech stocks higher and slightly weak labor market data gave investors hope the Federal Reserve might move to lower interest rates later this year.

The S&P500 rose 1.18% to close at 5,354.03, a fresh record, and the Nasdaq Composite advanced 1.96% to 17,187.90, also a new record, as Nvidia shares jumped to make it the world’s second most valuable company.

The Dow Jones Industrial Average trailed a bit as stocks outside of technology underperformed, adding just 0.25%.

— CNBC’s Brian Evans and Alex Harring contributed to this report.

Bank of Japan board member Nakamura reportedly warns inflation target may not be met

The Bank of Japan’s inflation target of 2% from 2025 onwards may not be met, BOJ policymaker Toyoaki Nakamura said in a speech in Sapporo, Reuters reported Thursday.

“My view is that inflation may not reach 2% from fiscal 2025 onward” should households curtail spending and discourage companies from raising prices further, he reportedly said, adding that domestic consumption has been sluggish.

The nine-member board’s median forecast made in April pegs core consumer inflation at 1.9% for both fiscal 2025 and 2026.

— Lee Ying Shan, Reuters

Australia exports drop 2.5% in April to hit lowest level since December 2021

Australian exports fell 2.5% year on year in April to hit their lowest level since 2021, with goods exports amounting to 43.32 billion Australian dollars ($28.91 billion).

The Australian bureau of statistics said the decline was driven by metal ores and minerals. Imports to Australia fell 7.2% year on year.

Due to the lower imports, the country’s trade surplus for April surged to AU$6.55 billion, more than the revised AU$4.84 billion and beating Reuters expectations of a AU$5.4 billion surplus.

— Lim Hui Jie

Foxconn raises outlook for second quarter as May revenue surges; shares up 2.6%

Multinational electronic contract manufacturer Foxconn has reported a 22% year-on-year rise in revenue in May.

The company reported a revenue of 550.16 billion new Taiwan dollars, a record high for May.

Foxconn also said that the second quarter was a traditionally “off-peak” season, but due to higher-than-expected demand from Al servers, “current visibility for the second quarter is expected to beat expectations.”

Shares of Foxconn, which trades as Hon Hai Precision Industry in Taiwan, climbed 2.56% on Thursday.

— Lim Hui Jie

SoftBank Group extends gains, up over 5%, as activist investor Elliott calls for $15 billion buyback

Shares of Japanese investment firm SoftBank Group Corp surged over 5% on Thursday, extending their 4.6% gain from the previous session.

Activist investor Elliott Management has rebuilt a stake worth more than $2 billion in SoftBank and is pressing for a $15 billion share buyback.

Separately, Tempus AI, a healthcare technology company backed by Softbank, is targeting a valuation of up to $6.10 billion for its U.S. initial public offering, according to SEC filings.

— Lim Hui Jie, Rohan Goswami

CNBC Pro: This ‘quasi monopoly’ chip stock will drive AI trend for the next decade, says fund manager

A European chip stock “is almost in a quasi-monopoly position” to drive developments in artificial intelligence over the next decade, according to fund manager Marcus Morris-Eyton.

The chip company’s products enable the manufacturing of AI chips designed by Nvidia, AMD, and Intel.

Morris-Eyton, the fund manager behind AllianceBernstein’s Global Growth Portfolio, said the stock is going through a rough patch in 2024 but is expected to have a “very strong year next year”.

— Ganesh Rao

CNBC Pro: Investing in India after the elections? The pros like these sectors and stocks

India’s stock market has been topsy-turvy in the past week.

Markets hit all-time highs on Monday following news of a potential hat-trick for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) but eventually tumbled after it began losing its parliamentary majority.

Such a phenomenon raises “concerns about policy continuity, economic reforms, and overall investment climate [causing] increased market volatility, potential capital outflows, and a slowdown in both foreign direct investment and domestic investment,” Dhruba Jyoti Sengupta, CEO of Wrise Private Middle East, told CNBC Pro.

As markets react to the election results – WealthMills Securities’ equity market strategist Kranthi Bathini says “India’s stock markets need stable policy continuity going forward.”

The pros are now looking at sectors – and stocks – to capture India’s growth potential in the longer-term.

— Amala Balakrishner

Stay with sector leaders, Allspring’s Patel says

Investors should look to sector leaders right now, according to Margaret Patel, senior portfolio manager for multi-asset solutions at Allspring Global Investments.

Patel pointed to Broadcom, Eaton and McKesson as specific examples of these key names that traders should consider.

“You continue to need to stay with the leaders in their sectors,” Patel said on CNBC’s “The Exchange.” “That’s what we’ve seen over the last couple of years — strong, big companies just get stronger and stronger.”

She noted that smaller-cap companies, by comparison, have cooler growth in line with the chilled macroeconomic environment.

— Alex Harring

Nvidia hits $3 trillion market capitalization for the first time as shares pop

Artificial intelligence darling Nvidia leapt to a market cap of $3 trillion Wednesday afternoon.

Shares surged more than 4%, jumping to a fresh all-time high of $1,221.25 during the session. The stock has been on a stellar run in 2024, up 146% in 2024, as investors bet on the AI boom and Nvidia’s role in supplying the chips to power it.

Nvidia is in good company among tech giants in the $3 trillion market cap club, joining the likes of Microsoft and Apple.

— Darla Mercado, Kif Leswing

ISM services index rose more than expected in May

Activity in the U.S. services sector expanded at a faster-than-expected pace in May, according to a report Wednesday from the Institute for Supply Management.

The ISM services index showed that 53.8% of purchase managers surveyed reported expansion, up from 49.4% in April and better than the Dow Jones estimate of 50.7%.

Within the PMI survey, indexes for new export orders and production posted double-digit percentage increases for the month while imports tumbled. The employment index edged higher while the prices gauge nudged lower.

— Jeff Cox

Source : cnbc