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Risk-on leads stocks rebound, airlines surge, oil, gold down further

stocks robound

Asia markets are set to open higher following a strong rebound in the US stock markets overnight amid falling oil prices and ceasefire talks. Growth stocks found strength as investors looked past slowing economic growth and piled into the discounted tech shares one day ahead of the FOMC meeting. Covid-19 induced lockdowns continue rattling Chinese stock markets, with SHI and HIS down 4.59% and 5.72% respectively on Tuesday.

SPI futures point to a 0.6% gain on the S&P/ASX 200 at the open and the NZX 50 was up 0.8% in the first hour of trading.

US and EU stocks

The Dow Jones Industrial Average rose 1.82%, the S&P 500 climbed 2.15%, and Nasdaq jumped 2.92%. 

Technology and consumer discretionary led the broader markets gains, both up more than 3%. All of the mega-cap tech companies rose between 2%-5%, with Amazon and Microsoft both up near 4%. Tesla Motors rose 4.6% and Nvidia jumped 7.8%.

Airline stocks surged on plunging oil prices. All of the major aircraft carriers, including American Airlines, Delta Airlines, and United Airlines were up more than 8%. 

Energy stocks fell for the second straight day. Occidental was down 2% despite Warren Buffett gradually buying the company’s stocks. Berkshire now owns near 12% of the energy giant’s outstanding shares. Both Exxon Mobil and Chevron fell more than 5%.

On the data front, the headline producer price index increased 10% in February from a year ago, up 0.8% MoM, slightly lower than the forecast of 0.9%. But the wholesale gasoline prices surged more than 14%, which is the one-month biggest jump since 2009. The core PPI rose 0.2% from a month ago, well below the forecast of 0.6%. The data doesn’t reflect the surging energy prices due to sanctions on Russia later in February. It is expected the data will go higher for the March report.

European stocks mostly finished lower, with Euro Stoxx 50 down 0.08%, DAX falling 0.14%, and CAC 40 losing 0.23%. The FTSE 100 declined 0.25%.

Treasuries

The US government bond yields had little changes from the previous day. The 10-year US Treasury yield was at 2.14%, and the 2-year Treasury yield stayed at 1.85%, both of which are the highest since July 2019.

Germany 10-year Bond Yield was slightly down to 0.33%, and the France 10-year Bond Yield was flat at 0.83%. The UK 10-year Gilt yield slipped down to 1.57%.

Commodities

The crude oil prices dropped further below the US$100-mark, with WTI futures falling 7.8%, to US$94.96 per barrel. The Brent crude futures slid 7.67%, to US$98.70 per barrel.

Precious metals also fell for the third consecutive session. Gold futures fell 2.16%, to US$1,918.4 per ounce. Silver slid 0.86%, to US$25. 09 per ounce.

Currencies

USD weakened against commodity currencies, such as CAD, AUD and NZD, and strengthened against safe-haven currencies, including JPY and CHF, as traders are awaiting the FOMC decision on monetary policy and further guidance. The US dollar index was slightly down to 98.96. The Eurodollar finished flat after rising 50 points against the greenback. The British pound firmed again the USD one day before the ECB policy meeting.

Cryptocurrencies

The leading cryptocurrencies were higher after a few days of the tight movement. Bitcoin was up 1.68%, to above US$39,000, and Ethereum rose 3%, to above US$2,600 in the last 24 hours. There are discussions around cryptocurrencies being hedging assets for inflation, but traders see no fundamental catalysts to boost the digital tokens on the horizon yet. 


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