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Value stocks shine, crypto looking at bottom reversal

airline

Asia markets are set to open flat as US stocks closed with little change despite wide swings in the overnight session. SPI futures are indicating an 11 point drop at the open of the S&P/ASX 200 and the NZX 50 is trading flat after the Waitangi Day holiday.

US stocks

US stocks gained early in the session but were sold off in the last hour of trading. Markets are expected to continue to swing widely with January CPI data due later this week. 

The Dow Jones Industrial Average was flat at 35,090.86, the S&P 500 fell 0.37%, and Nasdaq slid 0.58%.

Energy, financial and airline stocks shined. Delta Air Lines, American Airlines, and United Airlines all rose between 2% and 5%. JPMorgan Chase, Citigroup, and Goldman Sachs were all up marginally, while Wells Fargo gained 1.8%.

Communication services fell the most, down 2.2%, dragged lower by Facebook parent Meta Platforms after it said it is considering leaving Europe if it can no longer exchange data from European users with the US. Peter Thiel plans to step down from the board. The social media giant has slumped by 43% since last week due to the poor performance in the last quarter and weak forward guidance last week. Apple, Google parent Alphabet, and Microsoft all finished lower. Amazon was up 0.21%.

Coca-Cola and Disney’s fourth-quarter earnings will be closely watched this week.

Treasuries

The 10-year US Treasury yield traded at 1.918%, and the 2-year US Treasury yield was at 1.294% on Monday. The US Treasury yields curve steepened significantly since the Fed meeting in January, indicating markets expect a fast-tightening monetary cycle and strong economic growth.

Commodities

WTI crude oil consolidated above $US90, slightly down at $US91.40.

Gold rose $US14.50 an ounce, to $US1822.3, a one-week high. The precious metal is breaking above the 20-day moving average, to test the next potential level at $US1830.

Currencies

The US dollar index was flat, with the US dollar up against most other currencies, but weaker against the Australian dollar and New Zealand dollar after the two countries announced plans to reopen borders to international visitors, creating potential strong growth for their tourism industries.

Cryptocurrencies

Cryptocurrencies jumped, Bitcoin and Ethereum up almost 5% on Monday. The two leading tokens broke above the long-term descending trendline formed since November 2021 to test the 50-day moving average at $US45,000 and $US3500 respectively. According to Bloomberg, KPMG in Canada has added Bitcoin and Ethereum to its corporate treasury as an emerging technologies asset class. With the growing adoption of blockchain technology, the digital coins markets might be seeing a bottom reversal in the near future.


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