Asia markets could suffer after a volatile US session overnight. The Fed-driven selloff intensified in US stocks in the early session, but had a bottom reversal in the final hour on Monday, as investors looked for “buy-the-dip” opportunities. The S&P/ASX 200 was down 0.5%, to 7139.5 by the close on Monday and SPI futures are down 1.4%, indicating losses at the open today. The S&P/NZX 50 Index is down 0.4% in the first hour of trade.
By the close, the Dow Jones Industrial Average was up 0.3% after a more than 1000 points loss, the S&P 500 rose 0.3%, and the Nasdaq gained 0.6% after it dipped nearly 5%.
Since January, risky assets have been sold off as investors stay cautious ahead of the crucial FOMC meeting this week. The Dow and S&P 500 are down 8% and 9% from all-time highs, while the Nasdaq slumped 17% from its high seen in November, to an 8-month low. The tech-heavy index fell deeper into correction territory last Friday amid rapidly rising US bond yields. Investors have been dumping growth stocks as rising bond yields might cause a valuation downgrade, especially in those companies with high debt and P/E ratios.
The mega-cap tech companies bounced off session lows and most finished higher. Microsoft and Alphabet were both up more than 0.3%, while Amazon and Meta Platform finished more than 1% higher. Apple was down 0.11%. Tesla fell 1.35% Nvidia edged higher, and AMD was down 1.84%.
IBM’s positive fourth earnings report helped shares lift in after-hours trading, up 6%. The company’s revenue grew 6%, to $US16.7 billion in the fourth quarter. The earnings per share were at $US.35, slightly lower than consensus. However, the company’s software business was up 8% from a year ago.
Earning reports to watch this week:
Wednesday - Johnson & Johnson (JNJ) before US close; US: Microsoft (MSFT), Texas Instruments (TxN) after US close
Thursday: Boeing (BA) before US close; Tesla (TSLA), Intel (INTC) after US close
Friday: Apple (AAPL), RobinHood (HOOD), visa (V) after US close
The US dollar further strengthened against the other major currencies. The dollar index was up 0.23%, to 95.858. Loonie was down 0.39% against the greenback due to pullbacks in the crude oil price. AUD fell 0.4% again the dollar ahead of the Australian CPI later today. The USD was up 0.45% against the pound sterling, and 0.14% higher against the Euro.
The 2-year US Treasury yield fell to 0.969%, and the 10-year Treasury yield slid to 1.77%. The US bond yields are much higher than at the beginning of January when the 2-year yield was at 0.73%, and the 10-year yield was at 1.51%.
Gold futures were up $US10 per ounce, to $1842.3 as the safe-haven asset continued to consolidate above $US1830 since it broke key resistance at the same level.
WTI futures fell 1.6%, to $US83.78 a barrel. Oil prices are losing stream after briefly rising to an 8-year high at $US86.90. Both of US and China are to release strategic oil reserves to cool flaring prices.
The cryptocurrencies also bounced off lows on Monday. Bitcoin was up 4.78%, to $SU37,000 after falling below $US33,000 at the session low. Ethereum rebounded 2%, to $US2464 after dropping down below $US2200. Crypto markets wiped out $US1 trillion in market value over the weekend.