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Asian markets to open flat as US stocks finish lower

Wall Street started the week on a back foot as the US equity markets struggled to keep the rebounding trend from last week. The US bond yields moved higher, while the oil prices rose due to a discussion of new sanctions on Russia's oil by the G-7 countries, which may reignite the inflation concerns.

In Asia, all the major indices closed higher on Monday, led by the Chinese tech stocks, with HSI up 2.35%. The accommodative monetary policy continued to fuel the rally as the country reopened its economy after a 2-month strict covid lockdown in the financial hub city, Shanghai. China’s reopening optimism also supported a rebound in the commodity prices on Monday, which lifted Australia and New Zealand’s equity markets.

AU and NZ day ahead

The S&P/ASX 200 is set to open flat as indicated by the futures markets. The benchmark index followed the US market rebound last week, up 2% on Monday, with the financials, energy, and tech stocks leading gains. The local equity markets may also take a tailwind from the rebound in the prices of the resources this week. From a technical respective, the benchmark index faces key resistance at 6,700, and may head to the next pivotal resistance at 6,874, should it break out.

The S&P/NZX 50 was up 0.05% in the first half hour of trading, with Fletcher building, Air New Zealand, and Contact energy, leading gains. The local equity markets have strong reversed the downtrend last  week on strong company outlooks. China’s reopening also fuelled optimism. The upcoming ANZ business confidence data will be in focus later this week. t

US

The Dow Jones Industrial Average was down 0.19%, S&P 500 fell 0.29%, and Nasdaq declined 0.85%. 

The growth stocks slid, while the energy sector outperformed. All the big techs finished lower, with Amazon down 3%, and Microsoft falling 1%. The major energy producers, including Occidental and Exxon mobile, are both up more than 2%. Devon Energy jumped more than 7%. 

Robinhood shares jumped 16% on news that crypto exchange FTX expresses interest in an acquisition deal.  

On the economic front, both the US core durable goods orders and home sales in May both surprisingly rose 0.7% month on month, far more than expected by 0% and -3.5% respectively, suggesting the world-largest economy is not so bad as previously projected. But the better-than-expected data may strengthen the Fed’s aggressive tightening moves.

As for the company earnings, Nike’s fiscal fourth-quarter earnings beat expectations. The company topped both sales and profits estimates, with EPS at US90 cents vs. 81 cents exp., and the revenue at US$12.23 billion vs. $12.06 billion exp. The share’s price dropped 2% in after-hours trading.

Europe

European stocks were mixed. The Stoxx 50 (+0.16%), FTSE 100 (+0.69%), DAX (+0.52%), CAC 40 (-0.43%). 

Commodities

Crude oil prices rose on a renewed supply worries as the G-7 members consider further limiting Russia’s oil export. However, the potential resumed Iran nuclear talks, the US oil reserve release, and the OPEC+’s output increase may cap the gains.

WTI: US$109.57 (+1.81%), Brent: US$115.16 (+1.80%), Natural Gas: US$6.50 (+4.52%)

Gold slid on rising bond yields, while resources metal, such as copper, Aluminium, and Iron Ore, rose as the commodity markets rebounded.  

COMEX Gold futures: US$1, 824 (-0.34%), COMEX Silver futures: US$21. 16 (+0.19%), Copper futures: US$3.75 (+0.31%)

Agricultural products continued to fall.

Wheat: US$917.50 (-2.03%), Soybean: US$1,432.75 (+0.60%), Corn: US$653.00 (-3.12%).

Currencies

The US dollar weakened against the Eurodollar, Swiss Franc, and Canadian, but firmed against the other major currencies. Both Australian and New Zealand dollars weakened as the local bond yields slid, along with the recent price falls in the commodity markets. AUD/USD slid to 0.6923, and NZD/USD fell to 0.6300 at AEST 8:20 am.

Turkey’s Lira enjoyed a surge on an announcement of the government to ban company loans in Lira with excessive foreign currency reserves. TRY/USD jumped nearly 5% from the low on Friday.

Treasuries

The US bond yields rose on the better-than-expected economic data, with both EU and Asian bond markets following suit.

US 10-year: 3.20%, US 2-year: 3.132%.

Germany bund 10-year: 1.541%, UK gilt 10-year: 2.389%.

Australia 10-year: 3.767%, NZ 10-year: 3 938%.

Cryptocurrencies

The crypto markets steadied at the recent lows as the risk appetite somewhat recovered from the selloff two weeks ago. The whole crypto market cap was at US$941.35 billion, slightly higher than the last week of over US$800 billion. From a technical respective, the leading digital coins have been oversold, suggesting the directional bias is skewed to bullish.  

According to CNBC, the crypto hedge fund, Three Arrows Capital defaulted on a US$670 loan on USDC, and bitcoin.

(See below prices at AEST 8:38 am according to Coinmarketcap.com)

Bitcoin: US$20,819 (-1.10%)

Ethereum: US$1,204 (-0.64%)

Cardano: US$0.4897 (-0.32%)


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