The bull run continued on Wall Street amid recent resilient US economic data and a rebound in cyclical sectors, such as financials, materials, and energy stocks, while the AI-led rally in Nasdaq was losing steam, with Nvidia, Microsoft, and Alphabet all pulling back from their multi-month highs. But one stock was still gaining momentum, which was Apple. The tech giant rose for the third straight week, topping a US$3 trillion dollar market cap. However, in the new week and new month, the sector rotation will need to be closely watched as it seems that the Dow may start outperforming the Nasdaq amid banking and energy stocks’ comeback. It will be a busy and shortened week for the US with the Independent Day falling onto Tuesday. The FOMC meeting minutes and the non-farm payroll data are critical for the future market trend.
In the APAC region, the Reserve Bank of Australia is to decide on its Official Cash Rate. The reserve bank is expected to keep the rate on hold as the country’s monthly CPI dropped to 5.8% in April, sharply declining from 6.8% in the prior month.
What are we watching?
- Apple tops a US$3 trillion market cap: Apple’s shares rose 2.3% to 193.97 on Friday, reaching a market cap of US$3.05 trillion. While the AI-led buying frenzy may come to a pause, Apple’s shares continue to gather strength as the company was not involved in the recent hype cycle. Citi upgraded Apple’s price target to US$240 on a strong growth outlook.
- The USD resumed gains: The diverging policy stance among central banks continued to strengthen the king dollar against its peers, particularly in Asian currencies, with USD/JPY and USD/CNH reaching their highest levels since November 2022.
- US banking stocks rebound: The financial sector jumped after the 23 big banks passed the stress test, avoiding a severe economic recession as the Fed stated. Banking and growth-sensitive sectors, such as material and industrials may come back as investors start rebalancing their positions ahead of the second-quarter US earnings season.
- Crude oil consolidates: Oil markets rebounded from the week-low amid a larger-than-expected draw in the US inventory data. The OPEC + meeting will provide further clues on the supply front, where a further hint of output cut may take oil prices to reverse the downtrend.