Asia markets might be mixed after falls on Thursday, but SPI futures are up 1.5%, indicating a rebound on the S&P/ASX 200. The S&P/NZX 50 is up 0.32% in the first hour of trade. US markets showed signs of stabilising overnight and the VIX fear gauge lost steam.
With BHP shareholders voting for unification, the company is set to become a larger part of ASX indices. At the close today, BHP is expected to move from ~6% in the ASX 200 to ~10%, while also reducing the weight of other names in the index. It could lead to massive turnover, with analysts estimating around $25bn, as investors trim big index names and buy BHP.
US stocks
Wall Street closed mixed. Investors rotated funds to defensive stocks while continuing to dump high-valued tech stocks. The Dow Jones Industrial Average was down 0.02%, the S&P 500 fell 0.54%, and Nasdaq declined 1.4%.
Consumer staples and utility sectors, seen as defensive stocks, outperformed the S&P 500. The two sectors were up 0.58% and 0.78% respectively. Energy stocks kept pace, up 1.24%.
Tesla plunged more than 10% despite the EV maker beating both earnings and revenue in its fourth-quarter earnings, as the company indicated supply chain issues might limit future delivery. Intel slumped more than 6%. AMD shed 7%, and Nvidia was down 3.6%. Robinhood plunged 10% in after-hours trading after the company missed on its earnings report. Netflix jumped 8% but is still 30% down after the live streamer disappointed markets with its negative future guidance.
Most tech giants finished flat, Alphabet and Meta Platforms slightly lower, Microsoft was up 1%, and Amazon finished 0.66% higher. Apple finished flat but the share price jumped 2% in after-hours trading after the iPhone maker beat earnings expectations.
Investors are looking beyond strong fourth-quarter earnings and focussing more on future growth guidance in the environment of a tightening cycle and improving economic path. The high-value tech shares are being sold-off due to the valuation downgrade. Positive economic data did not help these stocks as an improving economy strengthens the Fed’s hawkish approach on monetary policy. The US fourth-quarter GDP printed at 6.9% YoY, much higher than the consensus at 5.5%. The jobless rate is dropping, proving that omicron is not a hurdle for the labor markets anymore.
Commodities
Gold tumbled for a second trading day amid a strengthened USD. The base metal plunged $US34.9, to $US1,794.9 per ounce, holding at above the 100-day moving average. If gold turns lower, the downward momentum might continue to approach the next support at 1,780. Gold does not have much fundamental support in the near-term macro environment of rising bond yields and a strong dollar.
WTI futures were down slightly, to $US87.08 a barrel, but still at an eight-year high.
Treasuries
The 2-year US Treasury yield stays at 1.19%, and the 10-year Treasury yield fell slightly, to 1.81%.
Currencies
The US dollar strengthened for a second trading day. The dollar index was up 0.87%, to 97.235. The USD strengthened again all the other currencies. The commodity currencies, especially AUD and NZD lost ground, falling more than 1% against the dollar.
Cryptocurrencies
Crypto markets also finished lower, hovering at the near-term lows as traders are trying to find the bottom. Buying power is in the accumulation phase while technical indicators show too much in the oversold territory.
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