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Asian markets set to open higher amid China optimism, US stocks pared losses following a choppy session

Chinese stocks

Asian equity markets are set to open higher despite a choppy session in the US stocks overnight.  The US benchmark indices initially fell sharply on the weak Chinese economic data but managed to bounce off session lows as the broad equity markets try to recover from the month-long recession fear-induced selloff. Nasdaq fell 1% as Tesla dragged the growth sectors.

China's retail sales contracted by 11.1% in April due to the Covid lockdowns, much lower than expected by - 6.6%. The deteriorated data sent the broad Asian markets lower in the early session before bouncing back to positive territory on signs of easing lockdowns in China.

AU and NZ day ahead

Both Australia and New Zealand equity markets are expected to be more resilient today as risk assets seem to be finding footing from the sharp decline last week.

The S&P/ASX futures rose 0.32%, pointing to a higher open in the ASX. The tech sector may be still under pressure in today’s session following the weak performance in the US stocks overnight, while the energy and mining sectors could take the tailwind of the rebounding commodity prices. And the benchmark index ASX 200 consolidates above the recent pivot support at 6,940 for the last 4 trading days.

A2 milk CFO, Race Strauss resigned, and David Muscat is named as the role, to be on board in October.  A2 Mike shares were up 0.21% at the open in NZX.

NZX 50 was up 0.31% at the open. The recent falling local bond yields may provide a potential dip-buy opportunity. However, it is expected that the RBNZ will raise the cash rate by 50-basis points at each of its meetings for the rest of the year amid rising inflation, according to economists at the Westpac Banking Group.

US

The Dow Jones Industrial Average rose 0.09%, the S&P 500 fell 0.42%, and Nasdaq slid 1.20%. 


Sector performance

Growth stocks were under pressure as rising rates and slowdown in economic growth continue to weigh on the tech stocks. Consumer discretionary is the biggest laggard as Tesla shares slumped 5.9% after CEO Elon Musk tweeted on Friday that the Twitter deal is to be delayed. The social platform’s shares tumbled 8%, to US$37.39, paring all the gains since late April.

Energy outperformed as oil prices jumped amid optimism toward easing lockdowns in China.

Winners: Energy (+2.62%), Healthcare (+0.69%), Consumer Staples (+0.45%), Utilities (+0.33%)

Losers: Consumer Discretionary (-2.12%), Technology (-0.91%), Financials (-0.78%), Real Estate (-0.8%), Communication Services (-0.59%), Industrials (-0.17%), Materials (-0.19%)

Stocks performance

Mega-caps were mixed: Meta Platforms Inc. (+0.71%), Netflix Inc (-0.60%),
Apple (-1.07%), Microsoft (+0.15%), Alphabet (-1.48%), Amazon (-1.99%), Tesla (-5.88%), Nvidia (-2.50%).

Big banks all finish lower on recession fears: Citigroup Inc. (-2.26%), Wells Fargo (-1.76%), Goldman Sachs (-0.63%) and JPMorgan Chase (-0.09%).

Company news

United Airlines’ shares rose 2.8% in the after-hours trading after the carrier gave a positive outlook for its second-quarter performance amid rising demands.

EU

The Europe major indices finished mixed on the disappointing Chinese April economic data.

The Stoxx 50 (-0.49%), FTSE 100 (+0.63%), DAX (-0.45%), CAC 40 (-0.23%). Read more

Commodities

Crude oil prices climbed to a six-week high amid easing health restrictions in China’s commercial hub, Shanghai, as the vice mayor indicates to slowly reopen the commercial hub’s economy in three stages. At the same time, the oil price continues to elevate by supply concerns on the EU’s proposal to fully ban Russia’s oil.

WTI: US$114.20 (+3.36%), Brent: US$114.24 (+2.41%), Natural Gas: US$7.96 (+3.82%)

Precious metals rose as the USD weakens due to falling bond yields.

Spot Gold: US$1,824.91 (+0.68%), Spot Silver: US$21.61 (-2.33%)

Algaculture commodities continue to rise on war-induced supply concerns. Indian bans wheat exports due to a domestic supply shortage.

Wheat: US$1,247 (+5.94%), Soybean: US$1,656 (+0.61%), Corn: US$809.50 (+3.62%).

Currencies

US dollar index fell off a 20-year high as US bond yields slumped. Commodities currencies, including the Australian dollar, New Zealand dollar, and Canadian dollar strengthened against the greenback amid rebounding commodity prices and China optimism.

The Japanese Yen rose slightly against the USD, indicating the bond markets rout start to ease. The Eurodollar rebounded from a 5-year low against the US dollar, back to above 1.04.

US dollar index: 104.245 (-0.36%)

EUR/USD: 1.0376

GBP/USD: 1.2320

USD/JPY: 129.11

USD/CHF: 1.0022

USD/CAD: 1.2852

AUD/USD: 0.6970

NZD/USD: 0.6308

Treasuries

Bonds yields were lower as equity markets try to rebound.

US 10-year: 2.882%, US 2-year: 2.574%.

Germany bund 10-year: 0.932%, UK gilt 10-year: 1.728%.

Australia 10-year: 3.378%, NZ 10-year: 3.560%.

Cryptocurrencies

The leading cryptocurrencies were lower in the last 24 hours but recovered losses from last week’s crash caused by a collapse in the stabelcoin, TerraUSD, and the related token Luna, as the broad risk sentiment shows signs of relief from the recent recession fears. 

Bitcoin: $30,081 (-3%)

Ethereum: $2,039 (-4.31%)

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