Asian stock markets are poised for a cautious opening following a pullback in US equities, which saw the S&P 500 retract from its record-setting rally. This shift has led to speculations that the market's rapid ascent might be overextended.
Upcoming economic indicators, including the Federal Reserve's preferred inflation measure, the personal consumption expenditures price index, are highly anticipated. These reports, expected on Good Friday—a day when markets are closed—are predicted to reveal persistently high inflation rates. Additionally, Federal Reserve Chair Jerome Powell is scheduled to speak on the same day, adding to the market's cautious outlook.
Morgan Stanley and JPMorgan Chase & Co. strategists have expressed concerns over the sustainability of current valuations if profit growth does not accelerate. This sentiment is echoed by RBC Capital Markets' Lori Calvasina, who suggests a market pullback might be imminent, given the S&P 500's recent performance well above its 200-day moving average.
Attention in Asia is also focused on efforts by the region's major central banks to stabilize currency markets, with China's yuan recovering after central bank intervention, and Japan addressing speculative moves against the yen.
Despite these challenges, the S&P 500 has seen nearly a 10% increase this year, driven by robust US economic data, rate cut expectations, and AI optimism, surpassing many year-end forecasts.
Goldman Sachs remains optimistic, maintaining a year-end S&P 500 target of 5,200, with potential for a climb to 6,000 led by tech megacaps. This outlook is supported by a pro-risk sentiment among investors, extending beyond technology stocks to other sectors, as noted by BlackRock’s Investment Institute and Oppenheimer Asset Management’s John Stoltzfus, who has raised his year-end S&P 500 target to 5,500.
Market movements also reflect cautious optimism, with gold prices approaching record highs and oil futures rising amid geopolitical tensions and OPEC+ output cut speculations.
Corporate news highlights include investigations into Big Tech by the European Union, potential delays for Take-Two Interactive Software Inc.'s Grand Theft Auto VI, and strategic financial moves by companies like Lucid Group Inc. and Manulife Financial Corp.
Investors are also keeping an eye on a packed schedule of key events and economic reports this week, including statements from ECB and Fed officials, GDP revisions, and consumer sentiment data, among others.
This story was produced without human intervention, using Bloomberg Automation and with additional reporting by Rita Nazareth.
