Asian markets are set to open higher following a positive close in the US stocks. Wall Street finished higher as stock markets try to rebound from a month-long selloff after the S&P 500 briefly fell into a bear market last Friday. While investors get a reprieve from the bear markets, recessions fears are still lingering amid global headwinds. Citigroup CEO Jane Fraser believes Europe is heading into recession due to the war-sparked elevating inflation and energy crisis, as she stated at World Economic Forum on Monday, where the ECB President Christine Lagarde clarified the central banks' approach to "exit negative interest rates" from July. The Eurodollar firmed strongly against the USD to a one-month high. Gold climbed higher for the fifth straight trading day amid a weakening dollar.
AU and NZ day ahead
The S&P/ASX futures were up 0.27%, pointing to a higher open in the ASX. The local equity markets run off session highs and finished flat at 7,148.90 on Monday the first trading day after the new labour government takes power. Fortescue metals jumped 3.2% amid the new Prime Minister, Anthony Albanese, vows to make a “Renewable Energy superpower” country. The Flash Manufacturing and services PMIs will be the spotlight on the economic front.
NZX 50 was up 0.52% at the open following the strong US stocks rally. However, not sure how long the rebounding phase could last on deepening recession fears amid rising rates and elevating inflation. The New Zealand dollar rebounded strongly ahead of the RBNZ meeting tomorrow when another 50-basis points lift is expected. The NZD/USD rose near half-cent, to 0.6467, a two-week high.
The Dow Jones Industrial Average was up 1.98%, the S&P 500 climbed 1.86%, and Nasdaq advanced 1.59%.
All the 11 sectors in the S&P 500, with the financial sector leading broad gains as the ECB’s indication of rate hikes lifted both EU and US bank stocks. JPMorgan Chase, Wells Faro, and Citigroup Inc. all jumped between 5-7%. The energy sector also performed strongly, with all the major fuel producers, including Occidental, Devon Energy, and Exxon Mobil up between 1-3%.
Big techs mostly finished higher, with Microsoft, Apple, and Alphabet leading gains, all up between 2-4%. Nvidia’s shares rose 1.22% ahead of the first-quarter earnings report tomorrow. It is expected the chipmaker may face headwinds in the gaming segment due to softening demands after a record revenue growth in the fourth quarter. Snap's shares plunged 20% in the extended trading hours, as the CEO expects a miss on revenue, and plans to slow hiring. The other social platforms were all down in the after trading hours, Meta platforms fell 8%, and Twitter dropped 3.6%.
Crude oil prices lost steam and went sideways for the last few trading days as rebounding hopes muted amid concerns of a Covid outbreak in Beijing, while the procedure for easing health restrictions in Shanghai seems extremely slow. With recession fears lingering around in the major economies, oil prices are struggling to continue the uptrend.
WTI: US$110.61 (+33%), Brent: US$113.50 (+2.02%), Natural Gas: US$8.74 (+8.18%)
Precious metals may have bottomed out amid mounting safe have demands and a weakened US dollar.
COMEX Gold futures: US$1,852.10 (0.55%), COMEX Silver futures: US$21.77 (+0.47%)
Algaculture products were mixed.
Wheat: US$1,190.00 (+1.82%), Soybean: US$1,687.00 (-1.07%), Corn: US$786.25 (+0.96%).
The Eurodollar strengthened against the US dollar to a 4-week high after ECB President Christine Lagarde indicated raising interest from July amid flaring inflation in the region. The US dollar index continues to fall against all other major currencies as risk sentiment seems recovering from the market rout last week, with commodities rebounding sharply against the greenback.
(See the below FX rates at EAST 7:33 am, Bloomberg)
US dollar index: 102.06 (-1.07%)
Bonds yields climbed on ECB’s indication to start rate hikes in July.
US 10-year: 2.851%, US 2-year: 2.629%.
Germany bund 10-year: 1.012%, UK gilt 10-year: 1.968%.
Australia 10-year: 3.322%, NZ 10-year: 3.515%.
The leading cryptocurrencies fell off session highs and were lower in the last 24 hours amid negative comments from influential people. The whole market cap dropped 0.78%, to US$1.27 trillion in the last 24 hours. The ECB President Christine Lagarde says Bitcoin and other cryptocurrencies are worth nothing, noting regulatory scrutiny is needed to protect inexperienced investors. Guggenheim Chief Investment Officer Scott Miner forecasted that Bitcoin could drop down to US$8,000 from the current level of just above US$29, 000.
(See below prices at AEST 7:46 am according to Coinmarketcap.com)
Bitcoin: US$29,401 (-2.08%)
Ethereum: US$2,000 (-0.68%)
XRP: US$0.4144 (-1.12%)
Cardano: US$0.5273 (-1.97)