(April 28) : Asian stocks were poised for a soft open Tuesday as investors braced for a wave of earnings from tech giants while keeping a close eye on developments in the Strait of Hormuz.
Equity-index futures for Australia and Hong Kong edged lower, while Japan was steady. S&P 500 contracts were little changed after the gauge stayed on track for its strongest monthly performance since 2020. A key semiconductor index pulled back following a historic rally, and the tech-heavy Nasdaq 100 was little changed. Oil was steady in early trading.
With little clarity on the geopolitical front, investors are turning their focus to earnings from a cohort of tech giants with a combined market value of nearly US$16 trillion. Alphabet Inc., Microsoft Corp., Amazon.com Inc. and Meta Platforms Inc. are due to report Wednesday, followed by Apple Inc. a day later, with the results likely to set the tone for global equities and test whether the recent rally in megacap tech can be sustained.
“Markets have recovered to new all-time highs while seemingly ignoring continued geopolitical risks that abound, and this has been done largely on the back of positive earnings revisions and expectations,” said Walter Todd, president and chief investment officer at Greenwood Capital Associates. “Any cracks that emerge in this outlook as the largest companies report in coming weeks pose a significant risk to market momentum.”
Meantime, the White House said US officials are discussing Iran’s latest proposal, but maintained red lines on any deal to end the eight-week war, including preventing Tehran from obtaining a nuclear weapon.
White House Press Secretary Karoline Leavitt said President Donald Trump had convened a meeting of national security officials to discuss an Iranian proposal. The comments followed reports that Tehran proposed an interim deal whereby it reopens Hormuz in exchange for Washington ending its blockade of ports.
See also: US futures gain, oil falls on signs of Iran talks
“The market appears to be reducing its reaction to US/Iran headlines with the outcome trending to a short-term deal followed by more detailed negotiations,” JPMorgan head of global market intelligence Andrew Tyler wrote in a note to clients.
Also this week, the Federal Reserve, European Central Bank and peers in Japan, the UK and Canada are all scheduled to set interest rates, together deciding monetary policy for about half of the world’s economy.
While investors expect them to leave rates unchanged, markets will be on alert for signs officials, including Fed Chair Jerome Powell and ECB President Christine Lagarde, are worried about the inflation threat posed by the disruption to oil supply stemming from the war.
See also: Powell says he’ll stay at Fed as governor with ‘low profile’
“The tone of the press conference will emphasize the prudence of the ongoing wait-and-see stance, although we suspect that investors are nearing the point at which one might expect the Fed to have a stronger conviction take on the fallout from the energy shock – even if that is unlikely to be communicated in its entirety,” said Ian Lyngen at BMO Capital Markets.
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