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Stocks tumble on spiking bond yields, oil extends losses, cryptocurrencies plunge

stock markets

Asia markets are set to open lower following the broader markets losses overnight. The US stock markets were hit by spiked bond yields and an extended lockdown in China, which sparked worries of an accelerating slowdown in global economic growth. The 10-year bond yields hit a fresh 3-year high ahead of the US CPI data later this week, suggesting markets are pricing in a continuation of rising inflation, which firms the odds for a half percent rate hike by the Fed in early May.

SPI futures fell 0.34%, pointing to a lower open in the ASX. The Australian stock markets have suffered from the global equity weakness since last week, with the benchmark index falling below 7,500. The weakness is seen in the mining and energy stocks due to ongoing lockdowns in China, while the financial sector benefits from the rising bond yields. Following the US session, airline stocks may gain momentum in today’s trading.

The NZX 50 may also suffer from the US session’s negative close. The index fell below 12,000, the lowest in two weeks. The local bank stocks may continue to benefit from the expectation of rising interest ahead of the RBNZ’s rate decision next week. Air New Zealand shares finished higher at NZ$84.5; the local flag carrier may extend gains in today’s session on the slumped oil prices.

US and EU stocks

The Dow Jones Industrial Average fell 1.19%, the S&P 500 was down 1.68%, and Nasdaq slumped 2.18%.

Growth stocks led the broader markets' losses as the major 10-year US bond yields surged to a 3-year high. All the mega-caps companies, including Apple, Amazon, Microsoft, Alphabet, and Meta Platforms, finished in red, down 2-4% overnight. Tesla Motors fell 4.8%, and Nvidia slid 5.3%.

The energy sector slumped near 3% on the falling oil prices. Occidental's shares tumbled 6.37%, and both Devon Energy and Exxon Mobil were down more than 3%. 

Bank stocks were relatively strong as rising interest rates may contribute to a higher net profit margin. Wells Fargo shares were up 1.23%, and JPMorgan Chase slid by 0.36%.

Airline shares benefited from weakening oil prices, with Delta Air Lines up 4%, and American Airlines Group Inc rising 2.2%.

The Europe major indices also fell. The Stoxx 50 fell 0.49%, DAX slid 0.64, and the FTSE 100 was down 0.67%. The French benchmark index, CAC 40, advanced 0.12% in hopes that the extreme right-wing candidate Le Pen may win the election. 

Treasuries

The US bond yields spiked. The 10-year US Treasury yield surged to 2.78%, a fresh 3-year high. The 2-year Treasury yield rose to 2.50%. The 2-year and 10-year bond yields curve reversed an inverted course, steepened further since the Fed’s minutes released the plan of the balance sheet reduction last Wednesday.

The Australia 5-year bond yield was slightly lower to 2.75%. The New Zealand two-year swap rose to 3.62%, the highest since February 2015 ahead of the RBNZ policy meeting this week.

Commodities

Oil prices extended losses on fears of a slowdown in the global economic growth sparked by China’s covid lockdowns. Plus, the US and its allies are to release an unprecedented amount of oil reserve, 300 million barrels in the next six months.

WTI futures slid 3.5% to US$94.78 per barrel, and Brent futures price was down 3.7% to US$98.94 per barrel.

The precious metal prices continue consolidating as safe-haven demands are mounting. The NYMEX gold futures were up $8, US$1,953. 65 per ounce and silver rose 1.65%, to US$25.23 per ounce.

Currencies

The USD strengthened against most of the other major currencies; the dollar index rose to 99.98 after briefly spiked to above 100 last Friday. The Japanese Yen weakened further, and USD/JPY rose 1%, to 125.49, the highest since June 2015. The Eurodollar jumped initially against the US dollar but cut gains and finished flat at 1.0884. All the commodity currencies slid against the USD, including CAD which tumbled the most due to slumping oil prices. USD/CAD advanced 0.5%, to 1.2634.

Cryptocurrencies

The Cryptocurrencies plunged amid risk-off sentiment. The whole market's cap fell to above US$1.85 trillion from above US$2 trillion last week. All of the major crypto coins fell more than 7% in the last 24 hours, with Bitcoin down below $US40,000, Ethereum falling under US$3,000, and XRP sliding to US$0.70.

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