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US stocks jump on a tech-fuelled rally amid Fed’s policy optimism

Bull market

Wall Street jumped as the PPI data came as lighter than expected, again pointing to cooled inflation after the US reported a sharp decline in the headline CPI. In the meantime, the jobless claims for the week ended 4 April rose more than expected, strengthening the odds for the Fed to peak its rate hike cycle.

Big techs led broad gains, with Nasdaq up 2% on Thursday and 16% year-to-date. While bond yields were slightly higher, the US dollar extended losses against other major currencies, sending gold futures to a 13-month high of above 2,050. Asian currencies surged after China reported cheerful trade balance data, suggesting the country’s economic recovery is steady, a positive sign for the commodity markets.

The US big banks, including JPMorgan Chase, Citigroup, and Wells Fargo, start reporting their earnings later today, which will be in the spotlight following the recent banking crisis.

Asian markets are set to open higher. The ASX 200 futures were up 0.20%, the Hang Seng Index futures rose 0.46%, and Nikkei 225 futures advanced 0.71%.

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Price movers:

  • 10 out of the 11 sectors in the S&P 500 finished higher, with consumer discretionary, technology, and communication services, leading gains, all up about 2%. Real Estate is the only sector that ended in the red, down 0.4% due to higher rates. All the big techs, including Apple, Amazon, Alphabet, Microsoft, Tesla, and Meta Platforms, rose between 2-4%.
  • Twitter partners with the trading and investing platform eToro to give users options to trade stocks, cryptocurrencies, and other assets, which is a major step for Elon Musk to turn the social media platform into a “super app”.
  • Alibaba’s shares rebounded 2% after a two-day decline as SoftBank offloaded $7.3 billion of Alibaba’s stake through prepaid forward contracts. Following similar sales last year, the bank lowered its stake to less than 4%.
  • Crude oil pulled back from a 5-month high, but it may be only a short-term correction. A softened US dollar and China’s economic recovery still offer bullish factors to the oil markets.
  • Gold futures hit the highest level since March 2022 as the US dollar softened further amid strengthened odds for a Fed pivot on monetary policy. The precious metal approaches its all-time high of above 2,070.
  • Ethereum hits 2, 000 for the first time since August 2022 following the broad rally in risk assets. The second-largest cryptocurrency jumped following Bitcoin’s surge early in the week, suggesting the digital coin markets may enter another bull market.  

ASX and NZX announcements/news:

  • Battery producer Nickel Industries (ASX: NIC) has raised $US400 million ($A590 million) through 2028 unsecured notes in the US144a market. Moody rated the issue as B1, and Fitch rated it as B+. 
  • Battery minerals producer IGO received approval from Western Australia's government for a battery material facility in Kwinana-Rockingham. 
  • Bank of Queensland will write down A$200 million of goodwill to comply with the regulation. TheAustralian Prudential Regulation Authority has approved the redemption of $A200 million in subordinated tire 2 debt, which is a form of capital required by the regulator to protect deposits in case of a crisis. 

Today’s agenda:

  • New Zealand visitor arrivals for February m/m.
  • US Retail Sales for March. The February data pulled back 0.4% from an outsized jump of 3.2% in January, suggesting the US economy holds underlying strength in the first two months, despite high rates.

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