Asia markets are set to open higher despite a choppy session in the US stocks overnight. Wall Street closed mixed as disappointing earnings result from Netflix shattered growth stocks, while investment funds continued to rotate into cyclical and defensive sectors on growth concerns ahead of the US Federal Reserve’s Chair Jerome Powell giving a speech on Thursday. The long-dated bond yields fell after major banks turned back to bond purchase on bets that inflation might be peaking.
SPI futures were up 0.40%, pointing to a higher open on the ASX. The benchmark index closed slightly up at 7,569 after hitting an 8-month high, as mining and energy stocks retreated. Rio Tinto fell 1.7% after the miner said iron ore shipments declined 10% annually due to reduced production caused by the pandemic. At the same time, consumer staples and banks may benefit from the overnight US stocks session.
The NZX 50 is steady, having rebounded from a near one-month low, supported by infrastructure and bank stocks amid rising rates. The first quarter CPI data printed at 6.9% Y0Y, lower than expectations of 7.1%, but the highest since 1991. The news weakened the NZ dollar.
US and EU stocks
The Dow Jones Industrial Average rose 0.72%, the S&P 500 edged down 0.06%, and Nasdaq slid 1.22%.
Netflix shed 36%, or $50 billion, in the market cap after the live streamer reportedly lost 200,000 paid subscribers in the first quarter, the first time in more than 10 years. Its rival, Walt Disney, was also down more than 5%. The selloff spilled over to other stocks that were slashed by valuation downgrades, such as Meta Platforms and Snap Inc., down 7.8%, and 8.7% respectively.
The other mega-cap companies mostly finished lower. Apple slid 0.13%, Alphabet was down 1.55%, Amazon fell 2.61%, and Microsoft rose 0.4%.
However, IBM surged 7% on a strong first-quarter report. Tesla fell 5% but rose 4% in after-hour trading on a beat on both EPS and revenue. The electrical motor maker’s revenue grew 81% annually.
The defensive sectors, including consumer staples, healthcare, and utilities, outperformed as investment funds looked for safe-havens. Real Estate also rose.
The European major indices were higher as investors cheered for sliding US bond yields while assessing the ongoing Ukraine war. The Stoxx 50 rose 1.72%, CAC 40 was up 1.38%, DAX advanced 1.47%, and the FTSE 100 climbed 0.37%.
The US long-dated bond yields slumped on comments from the major banks that they would start bonds purchases as the rate hike bets may have been overdone and inflation could be peaking. The 10-year US Treasury yield fell to 2.83% from 2.94% the previous day, while the 2-year Treasury yield was slightly down to 2.57%. The 30-year bond yield slid to 2.87%.
The Australian 5-year bond yield steadied at 2.80%. The New Zealand 5-year bond yield was slightly up to 3.43%.
Both oil and gold prices were flat after a sharp selloff on Wednesday as investors wait for more clues of fund movement ahead of other big tech earnings. Energy and precious metals were slashed by the IMF’s downgrade to the global economic outlook amid Ukraine war and China’s Covid-induced lockdowns the previous day.
Oil prices steadied. WTI futures were slightly up 0.38%, to US$102.44 per barrel, and Brent futures fell 1% to US$107.15 per barrel. The natural gas price continued to retreat, down 4.9%, to US$6.82 per MMBtu.
The NYMEX gold futures edged higher to US$1,960.10 per ounce, and silver slid to US$25.30 per ounce.
The US dollar slumped on falling bond yields. The US dollar index fell 0.63%, to 100.33. The Japanese yen firmed on comments from the deputy chief cabinet secretary that currency stability needs to be closely watched, suggesting officials may intervene if the yen devaluation continues. The USD/JPY retreated 1%, to 127.84 from a 20-year high of 129.40.
All of the commodity currencies including Australian dollar, New Zealand dollar, and Canadian dollar strengthened by 1% against the greenback. And Eurodollar, British pound also bounced from month-lows against the USD, back to 1.0856, and 1.3067 respectively.
The Cryptocurrencies were little changed. The global crypto market cap stayed at US$1.92 trillion. Bitcoin was trading at US$41 488 and Ethereum was slightly down to US$3,083.
The Crypto markets bounced off a month-low this week, supported by news that Bitcoin ETFs are set to launch both in Australia and US. According to Blockworks, 21Shares is to list two spot crypto ETFs in Australian dollar, tracing prices of Bitcoin and Ethereum on April 27. The funds are fully backed by cold storage at Coinbase. Also, the US Security and Exchange Commission approved an application for the Teucrium Bitcoin Futures ETF earlier this month.