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US stocks extend losses on climbing inflation, oil reclaims $100.

inflation

Asia markets are set to open lower as US stocks extended losses in the overnight session amid 40-year high inflation. The US headline CPI printed at 8.5% YoY, the highest yearly increase since 1981, while the monthly pace of growth slowed to 0.3% from 0.5%, suggesting inflation may be peaking. The stock markets gained initially but fell on the rebounding oil prices, which jumped above $100, reigniting inflationary concerns. The US earnings season will kick off tonight, with JPMorgan Chase and Delta Air Lines reporting first-quarter results.

SPI futures fell 0.09%, pointing to a slightly lower open in the ASX. Signs of rebounding raw material demands from China may offer relief. The global equity market’s weakness, however, still weighs on sentiment.

The NZX 50 fell for the fifth consecutive trading day, to 11,889 on Tuesday, heading to the March low of just above 11,700. More aggressive rate hikes and balance sheet reductions from the RBNZ are expected, pressing the local markets’ risk appetite.  

US and EU stocks

The Dow Jones Industrial Average slid 0.26%, the S&P 500 fell 0.34%, and Nasdaq was down 0.35%.

The financial sector is the biggest lagger in the S&P 500 ahead of earnings reports tonight. JPMorgan Chase lost 1.16%, Citigroup Inc declined 0.47%, and Goldman Sachs was down 0.41%.
Tech shares finished mixed, with Apple up 1.13%, and Tesla Motors Inc gaining 1.15%. The rest of the mega-caps, however, were lower, with both Microsoft and Meta Platforms down more than 1%.

The energy stocks gained as oil prices reclaimed $100. Occidental Petroleum, Devon Energy, and Chevron rose between 2% and 4%. 

The Europe major indices were all down, dragged by bank stocks. The Stoxx 50 fell 0.21%, CAC 40 declined 0.28%, DAX slid 0.48%, and the FTSE 100 was down 0.55%.

Treasuries

The US bond yields retreated on some positive read of the CPI data, suggesting that inflation may have peaked. The 10-year US Treasury yield was down slightly to 2.73%. The 2-year Treasury yield fell to 2.41%.

The Australia 5-year bond yield continues to trade lower at 2.74%. The New Zealand two-year swap rate, however, stayed at 3.63%, a 7-year high ahead of the RBNZ policy meeting later today.

Commodities

Oil prices spiked on optimism towards rebounding demands as there are signs that China’s lockdowns are slowly easing in some areas. Traders also believe the ongoing Ukraine war has had a material impact on the global energy supply, with peace talks in a stalemate.

WTI Futures surged 7%, to US$100.97 per barrel, and Brent Futures’ price jumped 6.7%, to US$105.03 per barrel.

The precious metal prices rose for the fourth straight day. The NYMEX gold futures were up $18.7, to US$1,966.90 per ounce, and silver rose 2.30%, to US$25.56 per ounce.

Currencies

The USD strengthened against the Eurodollar, the Swiss Franc, and the British Pound but fell against the commodity currencies. The U.S. Dollar Index climbed to above 100, the highest seen in May 2020. New Zealand dollar strengthened against most of the major currencies, up 0.38% against the US dollar, gaining 0.10% against the Australian dollar, jumping 0.9% against the Eurodollar, ahead of the RBNZ rate decision today, when a 50-basis-points rate hike is expected.

Cryptocurrencies

The cryptocurrencies were little changed in the last 24 hours. The whole markets cap moved slightly to US$1.85 trillion. Bitcoin was down 0.34%, to $US39,700, Ethereum gained 0.50%, to US$3,002, and XRP rose 0.55%, to US$ 0.7034.

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