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Wall Street turns on defensive mode amid signs of slowing economic growth

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Wall Street finished mixed on Wednesday as funds rotated to defensive stocks for safety after the US reported another weak job data. While energy led the Dow to gain, both S&P 500 and Nasdaq finished lower due to a second-straight day decline in tech shares. The March ADP payroll data showed that 145,000 new jobs were added in the private sector, a sharp decline from 261,000 in February. Following Tuesday’s two-year low job openings, the data signals an inevitable slowdown in the US economic growth.    

Risk-off again drove the flow in asset classes as bonds continued to climb, and gold consolidated above 2,000 hovering around a 13-month high. The US dollar recovered some losses against most of the other G-10 currencies but weakened further against the Japanese Yen, which is seen as a typical haven asset during a crisis.

Markets are awaiting the last influential economic data due for release on Friday in a holiday-shortened week for most regional markets. Light liquidity may also lead to wider volatility for the rest of the week.  

Asian markets are set to open mixed. The ASX 200 futures slipped 0.10%, Hang Seng Index futures were flat, and Nikkei 225 futures fell 0.47%.

Click to enlarge the table


Price movers:

  • 7 out of the 11 sectors in the S&P 500 finished lower, with consumer discretionary and technology leading losses, down 2.04% and technology, respectively. Energy stocks were particularly strong as perhaps the sector is seen as an inflation-bearing home amid the recent price jump in oil markets. The defensive sectors, including utilities, healthcare, and consumer staples, all finished higher on risk-off sentiment.
  • Apple is set to open its first retail store in India amid a slowdown in China’s economic growth and the intensifying geopolitical tension between China and US. The iPhone maker’s shares fell 1% on Tuesday but rose 14% from its March low.
  • New Zealand dollar pulled back from an intraday high after the RBNZ surprisingly raised the cash rate by another 50 basis points as markets expected a smaller increase of 25 bps. NZD/USD spiked 50 points to 0.6375 before retreating to 0.6319. The New Zealand dollar is seen as one of the most vulnerable commodity currencies amid the gloomy economic playout.
  • Gold futures finished flat and stayed at a 13-month high amid the current market nerve. It is a “gold” year, with all fundamentals, risk-aversion, falling rates, and softened USD, pointing to a bullish run of the precious metal.
  • Ethereum topped 1,900 for the first time since August 2022, and the global crypto market cap rose to $1.21 trillion, up 1.2% from the last 24 hours. However, the crypto market may face a profit-taking decline after a multi-month rally as the charts of Bitcoin and Ethereum surface bearish divergence from a technical perspective. 

ASX and NZX announcements/news:

  • Bank of America downgraded Albemarle from old to sell due to a slump in lithium prices. The American mining giant’s acquisition offer was declined by the ASX-listed mining company, Liontown (LTR) for price negotiation.

Today’s agenda:

  • The monthly ANZ commodity price change for March is due for release at 1:00 pm in local time.
  • Australian RBA financial stability review and trade balance for February. The data will be released at AEST 11:30 am in Australia.
  • China Caixin service PMI will be out at 9:45 am Beijing time. 

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