Wall Street extended gains as growth stocks continued to shine ahead of major tech earnings, with Microsoft reporting its Q2 FY23 results on Wednesday and Tesla releasing the final quarter performance on Thursday. A slew of job cuts by the tech companies has also fuelled optimism as investors believe layoffs can reduce expenses to lift their profit margin. However, the US bond yields climbed as well as the US dollar index, signalling potential exhaustion in the market rally if the trend continues.
Elsewhere, the European markets all finished higher amid positive economic data as most of the members’ flash PMI data for January may set for a strong pick-up from the prior month, suggesting the region speeds up economic recovery due to a sharp decline in energy prices.
In Asia, Chinese markets closed for the Luna Year holiday. But optimism towards China’s reopening continued to lift most Asian stock markets, with futures pointing to a higher open. The ASX futures rose 0.28 and Nikkei 225 futures were up 0.95%.Click to enlarge the table
- Nasdaq continued to outperform Dow and S&P 500, up 2% as tech shares rose further amid dip-buys. 10 out of the 11 sectors in the S&P 500 finished higher, with Technology leading gains, up 2.3%. Apple rose 2.4%, Meta Platforms was up 2.8%, and Tesla jumped 7.8%. Energy was the only sector that closed in red as crude oil pared early gains.
- USD/JPY jumped for the second straight trading day to above 130 as the yield on the 10-year JGB fell for five trading days in a row after the BOJ remained its ultra-loss monetary policy. The pair is testing the key resistance of the 20-day moving average again, a bullish breakout of this level may take it to the next potential long target of 133.
- Gold futures bounced off session lows and finished slightly higher as the US dollar stabilized above 101 for the last 7 sessions. The surge in gold may take a breather amid a rebound in the US bond yields from a near-term view.
- Oil prices pared early gains, retreating from key resistance levels as traders reassess the demand outlook. Despite China’s reopening, the recent rally in oil markets is seeing momentum exhaustion as economic concerns become concerns one week ahead of the Fed rate decision.
- Cryptocurrencies continued their upside momentum by following the tech shares’ rally, with Bitcoin reaching 23,000 and Ethereum consolidating above 1,600.