Asian Stocks Rise Ahead of Corporate Earnings Season

Asian stocks climbed for the third day on Tuesday, as optimism for upcoming corporate earnings season set trade tensions aside.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.06 percent to $540.10, while Japan’s Nikkei 225 added 0.77 percent to ¥22,223.00 and South Korea’s KOSPI gained 0.37 percent ₩2,294.16.

Hong Kong’s Hang Seng fell 0.01 percent to HK$28,687.00, while mainland indexes extended sharp increases seen on Monday, with the benchmark Shanghai composite advancing 0.44 percent to CN¥2,827.44, and the Shenzhen composite climbing 0.71 percent to CN¥1,585.78.

A rally in bank shares ahead of earnings reports later this week also pushed US shares to their highest in over a month, with the S&P 500 banks index marking its sharpest climb since March 26. Dow Jones Industrial Average gained 1.31 percent to $24,776.59, while S&P 500 added 0.02 percent to $2,788.00.

Trade Tensions Step Aside, Investors Anticipate Upcoming Earnings Season

With US President Donald Trump occupied on a Supreme Court pick and an upcoming visit to Europe, news of the US-China trade dispute seemed to have lessened since Friday’s US and China’s implementation of tariffs on $34 billion worth of each other’s products.

Even with overhanging fears over trade, market’s focus is still expected to shift to other vital developments, at least for the near-term.     

Investors are now turning their attention on companies that will be starting earnings season on Friday and they are hoping that strong results will add to a run of positive economic data.   

Global chief investment strategist Richard Turnill stated that robust US expansion is leading global growth and supporting corporate profits, although doubts over outlook is rising and financial conditions are tightening.    

Analyst James McGlew said several investors are also anticipating the second-quarter earnings season to see how the trade threat is affecting companies.

Concerns over a months-long trade spat between the US and China have kept investors on edge about the possible consequences of the two countries triggering a full-blown trade war that may leave global growth and corporate earnings in a bad state.

The conflict has also flustered Chinese financial markets, with the yuan hitting its worst monthly drop in June.

Trade tensions are still likely to simmer, despite the improvement in risk appetite seen so far this week, with economist Zhu Hani stating that trade war risk is likely to linger in the background, as countries begin to introduce measures to prepare for tariffs staying for a potentially longer-than-expected period.

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