Wall Street cut early gains and finished mixed after a tech-led rally in the early session ahead of the key CPI data that is due for release later this week. The US benchmark bond yields continued to fall, with the yield on the 10-year note declining to a nearly one-month low of 3.51%, sending the US dollar index to a 6-month low. The US Fed Chair Powell will speak at the Riksbank event tomorrow with no expectations that the central bank would change its persistent hawkish stance on monetary policy. Investors, however, seem to bet on a sooner Fed pivot, hoping inflation to further cool in the coming months.
Elsewhere, the European markets rose to the highest since Match 2020, buoyed by China’s reopening optimism, with both Euro Stoxx 50 and DAX up 1.3%. Both tech and travel-relating stocks strongly gained as China reopened its border for quarantine-free travel. Chinese shares again outperformed global markets as investors continued to bet on a fast recovery in its economy, with Hang Seng Tech Index jumping 3.4% on Monday.
- Nasdaq rose for the second consecutive trading day as growth stocks outperformed on bets that inflation may cool further. 5 out of 11 sectors in the S&P 500 finished higher, with Technology leading gains. Tesla shares jumped nearly 7% as investors piled into hard-beaten tech shares. Chip stocks have also performed strongly, with both Nvidia and Advanced Micro Devices up more than 5%.
- Bed & Bath Beyond surged 24% ahead of the earnings reports, despite a bankruptcy warning. The retailer’s shares tumbled about 97% from its January high in 2022 and warned of bankruptcy last week due to a sharp fall in sales, expecting net sales to fall nearly 33%, to about $1.26 billion in Q3 FY22. The earnings report will be released before the US market opens on Tuesday.
- Futures point to a mixed open across the Asian equity markets. ASX futures were down 0.14%, Nikkei 225 futures rose 0.93% and Hang Seng Index futures slipped 0.20%.
- Commodity prices continued to gain amid China’s reopening optimism, typically in the industrial metals, such as copper and crude oil. China further relaxed its covid curbs, boosting optimism that the country will soon return to its strong growth in the economy as the PBOC continues to impose more stimulus measures to support the property sector.
- Both Chinese shares and the Chinese Yuan continued to rally. Signs of relaxation in tech crackdowns have also lifted Chinese tech shares to multi-month highs, with Alibaba stocks surging more than 85% from its October low to just under HK￥110, the highest seen in July 2022. Alibaba’s founder Jack Ma gives up his control of Ant Financials, a domestic financial arm of the e-commerce giant, which was also a catalyst that has further boosted the stocks.
- Gold futures retreated from the 6-month high, perhaps on profit-taking trades. Gold surged by more than 15% from its November low to a six-month high due to the sharp decline in the US dollar and the US bond yields in the wake of two consecutive cooling inflation data. China’s reopening optimism has also sparked bullish bets in both industrial metals and precious metals. In the new year ahead, gold may also become a major haven asset again as recessionary risks arise.
- Cryptocurrencies rose amid broad optimism, along with the outperformance in tech shares. Both Bitcoin and Ethereum rose to above 17,300 for the first time since mid-December.
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