SYDNEY- Asian shares climbed toward five-month peaks on Monday as investors wagered the US earnings season would see most companies beat forecasts given expectations had been lowered so far by coronavirus lockdowns.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.2 percent, having climbed sharply last week on the back of surging Chinese stocks, which jumped another 2.3 percent on Monday.
Japan’s Nikkei gained 2 percent and South Korea 1.7 percent. E-Mini futures for the S&P 500 rose 0.64 percent even as some US states reported record new cases of COVID-19, a divergence that shows no sign of stopping.
EUROSTOXX 50 futures added 1.5 percent and FTSE futures 1.2 percent.
“Ongoing grim US COVID-19 infection news continues to be summarily ignored in favor of ongoing optimism regarding the time-line for the discovery and rapid roll-out of an effective vaccine and/or more policy support for asset prices and the US economy,” said Ray Attrill, head of FX strategy at NAB.
“JP Morgan, Citigroup, and Wells Fargo all report on Tuesday and there’s a view that the bar has been set pretty low for them to report the almost obligatory ‘better than expected’ results – the absence of forward guidance from many firms notwithstanding.”
Wednesday sees Goldman Sachs and Bank of New York report, while Thursday has Netflix and Morgan Stanley.
While bank shares rose sharply on Friday they have been badly lagging technology stocks, with analysts at Bank of America noting tech outperformance in the past six months was greatest since the 1999 tech bubble and the 2008 global financial crisis.
If the S&P 500 was just “tech, health care, Amazon, Google” the index would now be 4,173, they wrote in a note, way above the current level of 3,185. If made up of everything else, it would be 2,924.
