Asia markets are expected to be under pressure following another wide trading day in the US markets overnight. Wall Street continues to swing off session lows, but uncertainty remains on Tuesday. Investors are getting more nervous approaching the Fed’s decision on Thursday. The VIX hit a 14-month high before pulling back. ASX slid 2.49% on Tuesday.
The US major indices closed lower. The Dow Jones Industrial Average was down 0.2%, the S&P 500 fell 1.26%, and Nasdaq declined 2.28%.
In general, the cyclical stocks outperformed the growth stocks. The energy sector saved the day, up 3.89%, to lift the Dow higher as crude oil rallied amid supply fears sparked from the Russian-Ukraine conflict. Tech and consumer discretionary are facing ongoing pressure amid concerns of the Fed’s tightening moves and rising bond yields.
In Energy, Occidental shares jumped 8%, chevron was up 4%, and Devon Energy surged 5.8%. Airline groups were mostly higher, Delta Airlines was up 1.6%, and United Airlines rose 0.4%. Bank stocks also had a strong session, up 0.48%. Citigroup shares gained 2.56%.
All the tech giants closed lower, Alphabet, Amazon, Microsoft, and Meta Platform were all down more than 2%, Apple fell more than 1%.
At the earnings front, IBM jumped 5.5% after the company indicated to see positive future revenue growth in its software business. American Express shares surged 8.59% after the company beat the earnings expectation. Its net income was $1.72 billion in the fourth quarter, up from 1.44 billion from the previous quarter.
Microsoft shares price fell 5% after-hour despite the strong earnings report as CFO indicates ongoing supply issues, also the tech routs amid the Fed's policy.
The bond yields traded higher. The 2-year US Treasury yield rose to 1.029%, and the 10-year Treasury yield up to 1.785%.
The gold futures continue to climb higher, supported by the risk-off sentiment. The precious metal rose $7, to 1,848.7 per ounce.
The WTI futures gained 2.44%, to $85.32 per barrel. The oil price continues to rise due to undersupply issues and the recent concern towards the Russia-Ukraine crisis.
The US dollar index was slightly higher, up against Swiss Franc, Euro, and NZD, but down against AUD, JPY, and GBP. The Aussie strengthen after Australia reported the higher-than-expected Q4 CPI, which sparked the expectations for the RBA to end its asset purchase in the coming policy meeting on Feb 1. Canadian dollar consolidates against the dollar ahead of the CBA meeting tomorrow. The rising oil prices also help to strengthen the Loonie.
The crypto markets were flat overnight but face ongoing pressure as risky assets are being dumped by investors due to the Fed’s policy concerns. Bitcoin was down 87% from its all-time high in November 2021. And Ethereum plunged 30% during the same time period.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.