© Reuters. FILE PHOTO: A man standing at the overpass with an electronic board showing the Shanghai and Shenzhen stock index in Shanghai
By Hideyuki Sano and Alvin Scott
TOKYO / NEW YORK (Reuters) – Asian equities slipped on Wednesday as investors watched the Federal Reserve’s own monetary policy guidance while futures trading of US tech stocks sprung after strong earnings from Microsoft (NASDAQ :).
The gauge of Asian ex-Japan shares of MSCI slipped 0.3%, drawing less from taking advantage in resource shares as some investors have become wary of the increased valuation.
But Nasdaq futures rose 0.5% after Microsoft’s sharp quarterly results were up 0.2% and the region’s tech-heavy markets, such as South Korea and Taiwan, made small gains.
Microsoft shares increased 4% in expanded business after its Azure cloud computing services grew more than 50%. The results fueled optimism for other US tech giants including Apple (NASDAQ 🙂 and Facebook (NASDAQ :), which announce quarterly results later in the day.
“Microsoft’s earnings were impressive even with strong market expectations,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ (NYSE :). Morgan Stanley (NYSE:) Securities.
“The shares of those tech firms have declined slightly since August, but given their solid outlook, the market is likely to rise again,” he said.
At its peak in August, the combined market capitalization of the top five largest US tech companies, including Amazon (NASDAQ 🙂 and Alphabet 🙂 (NASDAQ :)) reached 24.6% of the US Blue Chip Index. It was 22.7%, up from 15% two years ago.
The S&P 500 futures were mostly flat, with caution ahead of the Fed’s policy meeting, as well as gains on cyclical stocks after a boom this month.
The S&P 500 is now trading at 22.7 times its projected earnings, 23.1 times its September peak, its highest level since the Dotcom bubble in 2000.
The US Federal Reserve is due to announce the results of its two-day policy meeting on Wednesday. Analysts expect the Fed to stick to its doodle accent to help spur economic recovery.
The US stimulus talks with US Senate Majority Leader Chuck Schumer are also in keeping with Democrats saying that Democrats will proceed to President Joe Biden’s $ 1.9 trillion coronavirus relief plan without Republican support if necessary.
With the benchmark 10-year note yielding 1.040%, Biden may have to delay his ambitious stimulus plan due to rising speculation to a three-week low of 1.028% on Tuesday.
The US dollar was slightly shifted as investors awaited the Fed’s decision for clues as to whether they should buy riskier currencies.
This week tapped a low of 90.211, while the euro gained $ 1.2162.
Sterling rose 0.1% to $ 1.3735 after May 2018, while the Japanese yen moved slightly backwards to 103.71 per dollar after the previous day’s small gain.
The Australian dollar had changed slightly to $ 0.7744, showing a muted response to stronger than local inflation figures.
Oil prices were supported by economic optimism, with futures trading up 0.3% at $ 52.79 per barrel.
The International Monetary Fund raised its forecast for global growth in 2021, as was widely expected, and many investors expect the global economic recovery to continue from the epidemic-induced global recession.