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US stocks rally amid earnings optimism, Meta jumps, yen tumbles, oil up

markets rally

Equity markets across Asia are set to open higher following a strong tech-fuelled rally in US stocks overnight. So far, US mega-cap earnings have been stronger than expected, with Meta Platforms jumping 17% on Thursday, boosting dip-buying sentiment after a month-long drop in the broader markets.

Oil prices climbed higher on concerns of a potential EU ban on Russia’s oil exports. Global inflation is keeping the economic outlook in check, with the first quarter of US GDP indicating an unexpected contraction of the economy by 1.4%, the first time since the pandemic era, raising concerns spiking prices may press consumption and prompt an economic downturn.

Chinese stock markets were up for the second trading day on Beijing’s stimulus measures to boost infrastructure. Major Chinese stock exchanges cut trading fees by 50% to power investment activities.

Australia and New Zealand day ahead

SPI futures rose 0.68%, pointing to a higher open in the ASX. Mining and energy companies surged on the third trading day, with Whitehaven Coal hitting a fresh three-year high at AU$4.96, up 13% for the week. The European energy crisis has been supporting Australia’s mining stocks, together with hopes of easing lockdowns in China. Next week, the financial sector will be in focus ahead of Aussie bank earnings reports and a possible rate hike by the RBA amid a significant jump in CPI numbers.

The NZX 50 was flat at the open. Pushpay went up 1.2%, to NZ$1.27 amid a potential takeover by a third party. Fletcher Building rose 1.22%, to NZ$6.22 on its share buyback announcement.

US and EU stocks

The Dow Jones Industrial Average rose 1.85%, the S&P 500 advanced 2.48%, and the Nasdaq jumped 3.06%. 

All 11 sectors in the S&P 500 finished higher. Growth stocks led broader market gains, with the technology and communication service sectors both up around 4%. Meta Platforms shares surged 17% on greater-than-expected user growth. Apple advanced 4% in the last trading hour and then fell 4% in extended trading hours, despite a beat on earnings expectations. The company did not provide future guidance for the current quarter or the last quarter. Amazon’s shares plunged 10% in after-hours trading on missed earnings as the e-commerce giant reported disappointing advertising revenue, resulting in the slowest quarterly growth in 21 years.

Energy also outperformed, up 3%, on rising oil prices. Airline stocks continue to advance on a positive global outlook.

The European major indices finished higher on bank stocks rally. Stoxx 50 rose 1.13%, CAC 40 was up 0.98%, DAX advanced 1.35% and the FTSE 100 was up 1.13%.

Commodities

Crude oil prices climbed for the third trading day on a potential EU ban on Russia’s oil. WTI crude futures were up 3.34%, to US$105.36 per barrel, and Brent futures gained 1.99%, to US$107.42 per barrel.

The natural gas price fell 6.15%, to US$6.89 per MMBtu as traders assess the progress of the EU’s block on Russia’s gas supply with required ruble payments.

Precious metals have been under pressure from a spiking US dollar. NYMEX gold futures were slightly up to US$1,891.30 per ounce, pivotal near-term support. Silver continues to fall, down 1.38% to US$23.18 per ounce.

Currencies

The Japanese yen tumbled to a fresh 20-year low after the Bank of Japan decided to keep the interest rate at -0.1% and unlimited Japanese government bonds available to purchase to keep the bond yield cap of 0.25%. The US dollar index rose for the sixth consecutive trading day, to 103.69, reaching the peak in March 2020 before the Federal Reserve’s rate cut due to pandemics. USD/JPY surged 2%, to 130.86.

All the other major currencies but CAD slumped against the US dollar, with the Eurodollar down 50 points, to just above 1.05. However, the Canadian dollar has been holding strongly on rising oil prices. USD/CAD was flat at above 1.28.

The Aussie dollar fell 0.40% against the greenback, to 0.7098. New Zealand dollar was down 0.80% against the USD, to 0.6489, the lowest since June 2020.

Treasuries

US bond yields were little changed. The 10-year US Treasury yield was flat at 2.83% and the 2-year Treasury yield slightly rose to 2.63%.

The Australian 5-year bond yield rose to 2.93% on expectations of a rate hike by the RBA next week and the New Zealand 5-year bond yield was unchanged at 3.59%.

Cryptocurrencies

Overall, leading cryptocurrencies were up, supported by the broad risk assets rally. Bitcoin rose 1.43% to $US39,770 and ethereum was up 1.42%, to US$2,926 in the last 24 hours. The whole market cap of cryptocurrencies was up 1% to US$1.82 trillion. 


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