Asia markets are set to open lower but could be more resilient after a rollercoaster session in US stocks overnight. US equity markets recovered early losses from China’s sell-off and turned positive ahead of big tech earnings reports this week. Microsoft, Alphabet, Apple, and Meta Platforms are set to release first-quarter earnings results between Wednesday and Friday.
Fears of a potential widening of lockdowns in Beijing sent jitters through risk assets on Monday, with Shanghai SE Composite plunging 5.13% and HSI slumping 3.73%. The offshore Chinese yuan weakened sharply against the US dollar to the lowest since April 2021 on China’s growth concerns, while the US dollar reached a 2-year high. Oil futures fell below $100 amid concerns of declining demand. US bonds yields retreated as haven demand lifted bond prices which have an inverse relation with the yields.
Along with the Ukraine war, China’s lockdowns are causing major global supply chain issues, adding to concerns of looming global economic stagflation.
Australia and New Zealand day ahead
On Monday, Australia and New Zealand markets were shut for ANZAC day. SPI futures slid 0.30%, pointing to a lower open on the ASX. The benchmark index retreated from an 8-month high last Friday due to a rally in the Australian government bond yields as the RBA is expected to raise rates sooner than expected. The Ukraine war, China’s lockdowns, and global supply chain issues were also weakening the export outlook for major mining companies, such as BHP Group and Rio Tinto.
The NZX 50 dipped 0.40% in the first hour of trading. Pushpay jumped 25% at the open as the company revealed it had received an acquisition offer from a third party.
US and EU stocks
The Dow Jones Industrial Average was up 0.71%, the S&P 500 gained 0.57%, and Nasdaq advanced 1.29%.
The growth stocks led broader market gains ahead of big tech earnings this week. All the FAANG stocks finished higher, with Alphabet up 3.22%, Microsoft and Meta Platforms rising more than 2%. Both Amazon and Apple gained more than 1%.
Tesla CEO Elon Musk reached a deal of US$44 billion to take Twitter private. Twitter's shares jumped 6%, to $51.70 after a trading halt. Investors will receive a payout of $54.20 per share according to a statement from Twitter, a 38% gain montly. Tesla edged lower to $998.60.
Energy stocks fell on slumping oil prices. Both Devon Energy and Exxon Mobil declined more than 3% and Occidental was down 2.7%.
Europe major indices tumbled on a spill-over effect from the Asia markets on Monday. The incumbent French President Emmanuel Macron defeated the opposition candidate Marine Le Pen in the election. Stoxx 50 fell 2.15%, CAC 40 was down 2.01%, DAX slid 1.54% and the FTSE 100 declined 1.37%.
US bond yields fell as demand for safe-haven assets rose. The 10-year US Treasury yield fell to 2.81% and the 2-year Treasury yield was down to 2.62%.
The Australia 5-year bond yield slid to 2.84% from 2.94% the previous day. The New Zealand 5-year bond yield dipped to 3.48%.
Crude oil slumped on China’s widening lockdowns into the economic and political hub, Beijing, which sparked demand concerns.
WTI crude futures fell 3.38%, to US$98.62 per barrel, and Brent futures were down 2.40%, to US$102.17 per barrel. The natural gas price, however, surged 4.35% to US$6.81 per MMBtu.
Precious metals continue to fall amid a strong US dollar and strong bond yields.
The NYMEX gold futures lost 1.82%, to US$1,899.1 per ounce and silver slumped 2.35% to US$23.69 per ounce, a 2-month low.
The US dollar firmed further on rising rates and a slump of the Eurodollar. The US dollar index rose to 101.76, the highest since March 2020, whereas EUR/USD fell 1%, to 1.0713, a two-year low.
Both the Australian and New Zealand dollar fell for the third trading day against the US dollar amid growth fears caused by China’s lockdowns.
The British Pound also tumbled against the greenback to 1.2742, the lowest since September 2020. USD/JPY paused gains, down slightly to 128.17.
Cryptocurrencies reversed early losses and finished higher. Bitcoin rose 1.51%, to US$40,217 and Ethereum was up 2.07%, to US$3,006 in the last 24 hours. Dogecoin surged 21.21%, to US$0.16 amid Twitter’s takeover by Musk as the digital coin is one of the Tesla CEO’s favorite tokens that could be accepted as payment for Tesla cars.
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