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Asian markets set to rise as US stocks extend gains on strong retail data

Chinese tech stocks

Asian equity markets are set to open higher following a strong session in the US markets. The US stocks rallied on dip-buys as the retail data came better-than-expected in April, indicating the economy is still on a strong ride despite decades-high inflation. Fed Chair Jerome Powell reaffirmed his stance on interest rates to curb inflation. The US Treasury yield jumped on the comments.  

In addition, the major Chinese tech stocks, including Alibaba, JD.com, Tencent, and Baidu, all jumped between 4-6% after a meeting held by the National Committee, aiming to promote the “digital economy”.

AU and NZ day ahead

The US markets’ rally will be translated to a positive open in the local markets, with tech stocks mostly likely benefiting from the overnight session.

The S&P/ASX futures rose 0.98%, pointing to a higher open in the ASX. The benchmark index futures price had a bullish break-out the key resistance at the descending trendline and consolidates above the 10-day moving average, finishing at 7,181. The wage data will be a focus for the local currency’s movement as a strong earnings growth could strengthen the odds for the RBA to accelerate rate hikes in the next meeting. AUD/USD rose for 4 straight trading days, to 0.7034, heading to the next key resistance at 0.7065.

NZX 50 was up 0.46% at the open. The overnight global dairy price printed a 2.9% drop in the average price, or the fifth consecutive decline in the auction price, in which the whole milk powder fell 4.9%, to US$3,934 per ton. But the average price is still at its 7-year high. New Zealand dollar rose strongly against the USD, to 0.6366 in the last 4 trading days, though still at its 11-month low, due to the greenback’s weakness in the wake of recovering in the broad risk sentiment.

US

The Dow Jones Industrial Average was up 1.34%, the S&P 500 climbed 2.02%, and Nasdaq jumped 2.76%.  

Sector performance

10 out of 11 sectors in the S&P 500 finished in green, with the growth stocks leading broad market gains as dip buyers piled into the beaten-up tech shares. Financial also rebounded sharply amid rising bond yields.

Tesla CEO Elon Musk delays the Twitter deal due to bot members. He estimates that at least 20% of the daily active accounts are fake, while Twitter claims 5% on its bot members.

Winners: Technology (+2.91%), Materials (+2.86%), Financials (+2.69%), Consumer Discretionary (+2.68%), Industrials (+2.28%), Communication Services (+1.82%), Energy (+1.14%), Healthcare (+1.38%), Utilities (+1.02%), Real Estate (+1.05%)

Losers: Consumer Staples (-1.15%)

Stocks performance

Mega-caps were mixed: Amazon (+4.1%), Tesla (+5.19%), Nvidia (+5.28%), Apple (+2.56%), Microsoft (+2%), Alphabet (+1.75%), Meta Platforms Inc. (+1.32%), Netflix Inc (+2.19%).

Big banks jumped on strong economic data and rising bond yields. Citigroup Inc. (+7.56%), Wells Fargo (+3.55%), Goldman Sachs (-0.63%), JPMorgan Chase (+3.14%).

Company earnings

Walmart shares tumbled 11% on a miss on the earnings expectation on inflationary pressure. The company indicates high rising fuel costs, higher levels of inventory, and overstaffing are the major issues that cause a slowdown in growth.

JD.com rose 5% on a beat on the revenue estimate despite the slowest annual growth. The e-commerce giant has also taken a policy tailwind on Beijing’s pledge to promote the domestic digital industry.

EU

The broad European stock markets rise on China's optimism and a strong US session. The UK wage growth came in more than estimated, printing at 7% vs. 5.4% expected, promoting the Bank of England to be more aggressive on its rate hikes. The bank indicated recession risks in the last meeting.  

The Stoxx 50 (+1.52%), FTSE 100 (+0.72%), DAX (+1.59%), CAC 40 (+1.30%). Read more

Commodities

Crude oil prices snapped a 4-day winning streak after hitting a 7-week high, finishing lower on Tuesday as traders are cautious about the staged easing lockdown measures in China’s major city, Shanghai. The report by Reuters that the Biden administration was due to issue the oil company, Chevron Corp, to negotiate with Venezuela on oil export also added to the price pressure.

WTI: US$112.40 (-1.58%), Brent: US$112.73 (-1.32%), Natural Gas: US$8.30 (+4.37%)

Precious metals trimmed early gains and finished flat, pressured by the risk-on sentiment and rising bond yields.

Spot Gold: US$1,815. 20 (+0.00%), Spot Silver: US$21.63 (-0.01%)

Algaculture products mostly rose further on supply shortages.  

Wheat: US$1,277 (+2.40%), Soybean: US$1,678 (+1.30%), Corn: US$800.75 (-1.08%).

Currencies

US dollar index fell for the three consecutive trading days. Both Eurodollar and British Pound jumped more than 1% against the greenback. The ECB policymaker indicated to keep its plan for a 25-basis-points rate hike in July as a weak Euro could cause the bloc’s consumer price instability. Sterling jumped on strong wage growth and employment data in England, enhancing the odds for the BOE to further raise interest rates.

The commodity currencies were all strengthened against the USD, supported by China’s reopening optimism and the recovering broad risk sentiment.

US dollar index: 103.34 (-0.83%)

EUR/USD: 1.0548

GBP/USD: 1.2489

USD/JPY: 129.38

USD/CHF: 0.9939

USD/CAD: 1.2811

AUD/USD: 0.7028

NZD/USD: 0.6330

Treasuries

Bonds yields jumped on Powell’s comments.

US 10-year: 2.986%, US 2-year: 2.711%.

Germany bund 10-year: 1.041%, UK gilt 10-year: 1.877%.

Australia 10-year: 3.400%, NZ 10-year: 3.648%.

Cryptocurrencies

The leading cryptocurrencies rose in the last 24 hours, along with other risk assets. However, the so-called stablecoin, tether faces threat as US$7 billion has been withdrawn from the supply, according to GoinGecko. The rival token, TerraUSD, collapsed to US 0.13 cents from US$1, which was supposed to be 1-1 pegged with the USD.

Bitcoin: $30,442 (+0.81%)

Ethereum: $2,082 (+2.06%)


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