Asian markets are set to open lower on thin liquidity as the US stock markets closed on the Memorial Day Holiday. The broad equity markets extended gains on Monday amid optimism about China’s reopening, with the commercial hub, Shanghai, gradually easing lockdowns from tomorrow. Both Nikkei and Hang Seng rose more than 2%, while the EU major indices topped one-month highs, led by retail stocks, following last week’s rally. Cryptocurrencies sharply rebounded amid dip-buys, with Bitcoin rising more than 7%, to above US$31,000.
However, crude oil prices continued to rise towards 14-year highs as EU countries have reached an agreement to partially ban Russia’s oil, which does not help ease elevating inflation to reduce cost-of-living. It will be interesting to see how the US markets steer the broad sentiment tonight when open after the holiday break.
AU and NZ day ahead
The S&P/ASX futures were down 0.12%, pointing to a slightly lower open in the ASX. The benchmark index had a very strong day on Monday, up 1.45%, powered by big miners and consumer discretionary stocks amid China’s reopening optimism. Bubs soared 44% on the FDA’s approval of the infant formula supply to the US. A2 milk jumped 10% in hopes to reach a similar deal with the US as the formula maker has submitted a supply application to FDA. In addition, the green stocks may take a ride as the Labour Party wins majority seats in parliament.
NZX 50 was up 0.39% at the open. The local markets are set for another resilient day by taking the global markets’ tailwinds. A2 milk will be in the spotlight today after a 10% jump on Monday. Fonterra’s shares are also on the rise amid a spillover effect. RBNZ indicates that the local economy will achieve a “soft landing”, while economists are not convinced by the narratives.
A slew of local economic data, including building consents for April, and ANZ business confidence for May, are in focus today. China’s manufacturing and non-manufacturing PMIs for May will be also influential data for the region.
The US markets closed on Monday for a public holiday. The futures markets were up marginally. Dow Jones Industrial Average futures were up 0.36%, the S&P 500 futures rose 0.52%, and Nasdaq futures advanced 1.04%.
The broad European stock markets rebounded, led by retail stocks. The Stoxx 50 (+0.86%), FTSE 100 (+0.19%), DAX (+0.79%), CAC 40 (+0.72%). Read more
Crude oil prices rose further to cap two-month highs. The EU members have reached an agreement to embargo Russia’s shipment by sea but excluding the pipeline delivery to keep supply to Hungary, which would block 2/3 of oil supply from Russia, according to European Council President Charles Michel.
WTI: US$115.07 (+0.98%), Brent: US$121.67 (+2.24%), Natural Gas: US$9.52(+5.55%)
Precious metals went into a range movement as haven demands softened.
COMEX Gold futures: US$1, 852 (+0.065%), COMEX Silver futures: US$22.00 (-0.41%)
Agricultural products were mostly higher amid supply concerns.
Wheat: US$1,157.50 (+1.25%), Soybean: US$1,732.25 (+0.33%), Corn: US$777.25 (+1.60%).
US dollar fell further as bond yields continued to slide. Commodity currencies rose further as traders see rebounding demands of China as the country slowly ease up its lockdowns in major cities. Eurodollar also firmed further on expectations that the ECB will raise interest rates in July, ahead of the CPI data to be released later this week.
(See the below FX rates at EAST 7:30 am, Bloomberg)
US dollar index: 101.34 (-0.36%)
EU and Australian bond yields were higher, while US markets closed.
US 10-year: 2.74%, US 2-year: 2.484%.
Germany bund 10-year: 1.05%, UK gilt 10-year: 1.987%.
Australia 10-year: 3.25%, NZ 10-year: 3.572%.
Cryptocurrencies strong rebounded on Monday amid dip-buys, suggesting risk sentiment recovers rapidly after the leading tokens drop to the lowest levels since July 2021, where are the survival supports from the technical perspective. The global market cap rose 7.29%, to US$1.31 trillion in the last 24 hours. Bitcoin rose more than 7%, to above US$31,000, and Ether jumped 9.6%, to just under US$2,000. Cardano outperformed the major tokens up 17%.
(See below prices at AEST 8:36 am according to Coinmarketcap.com)
Bitcoin: US$31, 638. 15 (+7.56%)
Ethereum: US$1,987.59 (+9.57%)
XRP: US$0.4146 (+6.68%)
Cardano: US$0.5628 (+17.37%)