SYDNEY, April 24 (Reuters) – Asian shares were mostly lower on Monday after a week packed with economic data and central bank meetings, with earnings from technology companies underperforming the S&P 500 so far this year.
Market action was muted after Friday’s surprisingly strong survey of business activity strengthened the case for higher interest rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.4%, while Japan’s Nikkei (.N225) rose 0.2%. Chinese blue chips (.CSI300) fell 0.4%.
In Australia, mining stocks ( .AXJO ) saw some weakness as Chile moved to increase state control over its lithium industry, which has the world’s largest reserves of the battery metal.
Both EUROSTOXX 50 futures and FTSE futures were little changed. S&P 500 futures and Nasdaq futures were down 0.3% ahead of a busy week of earnings.
Apple Inc ( AAPL.O ) and Microsoft Corp ( MSFT.O ) alone accounted for half of the S&P 500’s gains through March, so there is more riding on their outlook.
Despite the recent noise in the market, we believe Microsoft, Amazon and Google should deliver cloud results that meet Street1Q expectations this week,” analysts at Wedbush Securities said.
“We believe the key narrative of the tech earnings season will be the AI arms race, with each big tech player updating investors on their own AI ambitions/monetization strategy, as Redmond battles Google and other tech giants for the AI trophy.”
The U.S. House of Representatives could vote this week on a Republican plan to raise the debt ceiling in exchange for spending cuts. Weak tax receipts mean the government will run out of money earlier than expected.
Data on US wages and economic growth due this week will strengthen the case for further tightening. The Atlanta Fed’s influential GDP Now tracker showed the U.S. economy grew at an annualized rate of 2.5% in the first quarter, down just a shade from the previous quarter.
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Markets are pricing in an 86% chance the Federal Reserve will raise rates by a quarter point at its meeting in the first week of May, and fully expect a similar hike from the European Central Bank. ,
Central banks in Canada and Sweden meet this week, but most of the focus will be on the first meeting chaired by the Bank of Japan’s new governor, Kazuo Ueda.
Ueda said on Monday that policy easing should continue as inflation is still below 2% on a trend basis.
Only three of 27 economists polled by Reuters expect the BOJ to start scaling back its yield curve control (YCC) policy soon, but there are reports that the central bank is considering conducting a comprehensive review of the impact of its easing.
“The media backdrop suggests the YCC should not expect changes, but the writing is on the wall and the risk could be a more substantial change at the next meeting,” said Tabas Strickland, NAB’s head of market economics.
By contrast, the head of Belgium’s central bank warned in an FT article on Monday that investors are underestimating how much eurozone borrowing costs will rise.
The divergence in policy between Japan and other developed countries has seen the yen weaken steadily over the past few weeks, especially as the euro hit six-month highs.
The single currency traded at 147.56 yen against the dollar on Monday at 134.35.
The euro held at $1.0980, off its recent one-year high of $1.1075.
A higher dollar and bond yields weighed on gold, which fell 1.2% last week to $1,979 an ounce.
Chicago wheat rose nearly 1% after Russia threatened to scrap a grain deal allowing Ukrainian exports.
Oil prices also fell last week, although planned production cuts from OPEC provided some support.
Brent was down 66 cents at $81.00 a barrel on Monday, while U.S. crude was down 67 cents at $77.20 a barrel.
Reporting by Wayne Cole; Editing by Christopher Cushing
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