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US stocks sink on hot inflation, Asian markets set to fall

inflation rises

Asian equity markets are set to open lower following a further selloff in the US stocks overnight. The US markets sank to fresh year-lows after the CPI data disappointed dip-buyers. The inflation runs hotter-than-expected in April, which printed at 8.3% vs. 8.1% estimated, and the core CPI was at 6.2%, also higher than the forecast of 6%. The elevating inflationary pressure may push the Fed to move more aggressively on its rate hikes, which may lead to an economic recession if this bad loop persists despite the “soft landing” narrative from the Fed officials.

AU and NZ day ahead

The inflation fear-triggered selloff will certainly spill over to the local markets, typically in the tech sector.

SPI futures slid 0.50%, pointing to a lower open in the ASX. CBA reported an unaudited cash profit of A$2.4 billion in the third quarter, which is flat with the first half year’s quarterly average. The common equity Tier 1 ratio is 11.1%.

The NZX 50 was down 11 points at the open ahead of the second quarter inflation expectation data later today. Elevating inflation, rising interest rates, and the global headwind are heavily hurting the local investors’ sentiment.  

US

The growth sectors led to broader market losses, while energy outperformed. 

Dow (-1.02%), S&P 500 (-1.67%), Nasdaq (-3.18%).

Biggest Losers:

Consumer Discretionary (-3.71%), Technology (-3.39%), Communication services (-1.63%) Financials (1.01%)
Mega-caps slide amid tech-selloff.

Apple (-5.26%), Microsoft (-3.37%), Alphabet (-0.66), Meta Platforms Inc. (-4.49%), Amazon (-3.18%), Netflix Inc (-6.35%) Tesla (-8.2%), Nvidia (-5.42%). 

Biggest Winners:  

Energy (+1.35%), Utilities (+0.77%)

Chevron (+1.48%), Devon Energy (+2.00%), Occidental (+1.25%)

Company earnings:

Disney shares rose 4% in the after-hours trading after the company reported better-than-expected streaming subscribers.

Rivian Q1 Rev. $95M vs $ 131M est., forecast to produce 25K vehicles in 2022. Shares jumped 7% after-hour

EU

The Europe major indices finished higher for the second straight trading day, with energy sectors leading gains. A weak Eurodollar also buoyed the equity markets.

The Stoxx 50 (+2.62%), FTSE 100 (+1.44%), DAX (+2.17%), CAC 40 (+2.50%).

Commodities

Crude oil prices jumped on supply concerns as the EU ban on Russia’s oil looms. Signs of China’s decelerating Covid cases growth also helped the price rally. However, in the scenario of an economic resection, energy prices will eventually fall due to weak demands.

WTI: US$105.71 (+5.96%), Brent: US$107.50 (4.92%), Natural Gas: US$7.64 (+3.45%)

Precious metals were higher on risk-off sentiment.

Spot Gold: US$1,852.44 (+0.77%), Spot Silver: US$21.56 (+1.38%)

Algaculture commodities continue to rise on war-induced supply concerns.

Wheat: US$1,113.00 (+1.85%), Soybean: US$1,606 (+0.91%) Corn: US$788.50 (+1.71%).

Currencies

USD strengthened against most of the other major currencies. Japanese Yen firmed further as the bond markets selloff takes a breather amid mounting haven demands. The Canadian dollar also rose slightly against the USD. Both AUD and NZD erased early gains against the greenback and finished flat.

US dollar index: 103.994 (+0.73%)

EUR/USD: 1.0521

USD/JPY: 129.98

USD/CHF: 0.9949

USD/CAD: 1.2992

AUD/USD: 0.6934

NZD/USD: 0.6287

Treasuries

Bonds yields slid further on risk-off sentiment.

US 10-year: 2.921%, US 2-year: 2.647%.

Germany bund 10-year: 0.981%, UK gilt 10-year: 1.823%.

Australia 10-year: 3.50%, NZ 10-year: 3.75%.

Cryptocurrencies

The Crypto markets collapsed as the stablecoin, TerraUSD, plunged as much as 18%, to $0.6950, which is supposed to be 1-1 peg to the USD. And the relating token, Luna, slumped 94%, to $1.02. The risk-off selloff in the so-called stabelcoins triggered the crypto's crash, indicating an extreme fear in the risk assets sparked by today’s unexpected CPI data.

Bitcoin: $28,742 (-5.82%)

Ethereum: $2,073 (-8.94%)


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