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The Wall Street's rebound gathers steam as Fed's speech nears, Asian Markets set to rise

US Federal Reserve

US stocks’ gains gathered steam ahead of Fed Chair’s speech at Jackson Hole Symposium on Friday. The bullish bets for a dovish Fed strengthen as the event nears, with a broad-based rally buoying Wall Street. Risk-on domains the broad markets’ movements, while the USD weakened on a slide in the US bond yields, which boosted commodity prices, despite a drop in crude oil.

In Asia, Beijing’s move to allow the US regulator to review US-listed Chinese companies sparked a surge in Chinese markets, with all the Chinese tech stocks jumping between 6%-11% at the Hong Kong stock exchange on Thursday. The recent stimulus measures taken by China and short-squeeze trades may have also contributed to the rally.

Asian markets set to open higher amid broad optimism

The futures markets are pointing to a higher open in the APAC region following the strong close in the US markets, while the Chines stocks’ comeback may also give the broad equity a push.  

The S&P/NZX 50 may head into a resilient day after a flat close on Thursday. The local equities were losing steam this week on the caution of the global key event. A deteriorated New Zealand Q2 retail sales data also retrained the market’s gains.

On the earnings front, the largest port, Port of Tauranga reported FY22 net profit after tax at NZ$111.3 million, up 8% annually, with a dividend of NZ14.7 cents. The Chair, Julia Hoare, says the results are pleasing while expressing severe challenges over supply chain disruptions. 

ASX 200 is set to open higher as the futures price was up 0.13%. While the benchmark index may continue the upside momentum, the defensive sectors, including consumer staples and utilities, may be under pressure following the overnight US session.

Most Asia currencies strengthened against the US dollar as commodity currencies firmed on a rebound in commodity prices. The Australian dollar jumped 1% against the greenback to 0.6981, approaching the next potential resistance at 0.7050. And the New Zealand dollar was up 0.61%, to 0.6227, which is under the pressure of the 50-day MA at 0.6250.

Wall Street rallies as risk-on prevail

The Dow Jones Industrial Average rose 0.94%, the S&P 500 was up 1.37%, and Nasdaq jumped 1.65%.

All the 11 sectors in the S&P 500 were higher, with growth stocks leading gains.  The material sector also performed strongly. Meanwhile, consumer staples and utilities were the laggards as the risk-on trades pressed the defensive sectors.

Tesla’s per-share price fell to US$296.13 after the 3-for-1 share split. Most mega-cap techs finished higher, with Meta Platforming and Nvidia leading gains, up 3.4% and 4.1%, respectively.

Affirm Holding’s shares plunged 14% in after-hours trading due to a miss on earnings expectations. The digital platform operator reported a loss of US$0.65 per share, despite a beat on the revenue estimate. The “buy now, pay later” business is undergoing global headwinds, such as elevated inflation and rising rates, which soften consumer demands.

On the economic front, the US’s prelim Q2 GDP printed at -0.6%, higher than the first read of -0.9%, suggesting the world-largest economy may not be as bad as previously projected. While the figure stays negative, a technical recession is still on the table, given a 1.6% drop in the first quarter’s data.                                                                                    

Crude oil slid as Iran Nuclear talks in progress

Crude oil prices slid as the Iran nuclear talks are in progress, while faded risk-aversion trades pressed on the oil markets. However, the crude prices may remain strong as the supply cartel signaled to cut output if the price continues to fall. The supply-demand seesaw is still in control of the supply side. The Nymex WTI futures fell 2.5%, to $92.52 per barrel. And Brent crude futures at ICE was down 1.37%, to $99.83 per barrel.

Both precious and industrial metals rose due to a weakened US dollar. Comex Gold futures rose 0.56%, to $1,771.40 per ounce. Comex Silver futures were up 0.99%, to $19.16 per ounce. And Comex copper futures rose 1.37%, to $3.70 per ounce. 

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