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Stocks up on Twitter-fuelled tech rally, oil back above $100, bond yields higher

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Asia markets are set to open higher following the tech-led stocks rally in the US markets overnight. Hong Kong and China mainland stock exchanges are closed for public holidays. SPI futures are indicating a 0.7% rise on the S&P/ASX 200 in Australia, and the NZX 50 is gaining. Air New Zealand shares fell 14%, to NZ$0.905 on the NZ$1.2 billion Rights Offer on Monday. Energy stocks are likely to benefit as the oil price rebounds.

Tesla CEO Elon Musk purchased a 9.2% Twitter stake to become the largest shareholder of the social platform company. Twitter stocks soared 27%, and Tesla jumped 5% on Monday. Major US bonds yields continue to invert, flashing a recession alert to the economy.

US and EU stocks

The Dow Jones Industrial Average was up 0.3%, the S&P 500 advanced 0.81%, and Nasdaq rose 1.9%. 

Both consumer discretionary and communication service sectors were up more than 2%, led by Tesla and Twitter. Other social media companies also took a ride on the news, with Meta Platforms up 4%, and Snap Inc gaining 5%. The mega-cap tech giants finished higher. Apple, Amazon, and Alphabet were all up by more than 2%, and Microsoft rose 1.8%.

Energy stocks closed higher as oil prices rebounded from last week's selloff. The rest of the sectors, however, all closed lower, amid the economic uncertainty as the major US bonds yields continue to invert, suggesting investors are cautious about further stock market gains. Exxon announced that higher energy prices will bring a Q1 profit lift.

The US-listed Chinese shares jumped on Beijing’s full acceptance of the US inspections. Baidu surged 9%, NIO Inc. jumped 8.6%, Alibaba rose 6.6%, and JD.com was up 7.1%.

Europe’s major indices finished higher despite EU mulling new sanctions on Russia, in which the union members are divided on whether to embargo energy imports. The Stoxx 50 was up 0.83%, DAX rose 0.50%, and CAC 40 advanced 0.70%. The FTSE 100 was up 0.28%.

Treasuries

The inversions in the US long-dated and short-dated bonds yields continue to worry the economic outlook. The 10-year US Treasury yield traded at 2.40%, and the 2-year Treasury yield was at 2.42%. While the 5-year US Treasury yield traded at 2.55%, and the 30-year Treasury yield was at 2.46%. 

The Australia 5-year bond yields fell ahead of the RBA cash rate decision later today. The interbank futures are pricing in 3 rate hikes for 2022. It is expected that the RBA will become more hawkish despite not being in any hurry to raise rates at its previous meeting.

Commodities

Oil prices rebounded from last week’s selloff, but geopolitical tension is likely to keep oil gaining. WTI futures rose 4.48%, to US$103.72 per barrel. Brent was up 4.3%, to US$107.93per barrel.

NYMEX gold futures rose US$13.2 to US$1,936.9 per ounce, continuing to consolidate at the pivotal support around US$1,914.

Currencies

The Eurodollar weakened against the USD due to brewing new sanctions on Russia. The EUR/USD had a bearish break-out at the key resistance of 1.10. The German Consumer Price Index soared to 7.3% YoY to a record high. Economic uncertainty caused by Russia’s war on Ukraine continues to weigh on the single currency.

Commodity currencies, including AUD, NZD, and CAD, strengthened against the USD on the expectation of ongoing spiking export prices. The USD/JPY was flat at just below 123.

Cryptocurrencies

Cryptocurrencies were flat, Bitcoin slightly down to $46,494, and Ethereum flat at US$3,510.


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