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US stocks shrug off Fed concerns, US dollar dips, bond yields slide

the Fed

Asia markets are set to open flat as US stocks bounced off session lows but closed mixed in the overnight session. The February FOMC meeting minutes showed that the Fed officials support a faster pace on rate hikes and to start balance sheet reduction later this year to curb burning inflation. SPI futures are showing 3 points higher indicating a flat start to trade on the S&P/ASX 200 and the NZX 50 is 0.6% higher this morning.

US stocks

The three major indices finished mixed, but all bounced off session lows after the Fed meeting minutes were released. The Dow Jones Industrial Average was down 0.14%, the S&P 500 edged higher, and the Nasdaq was down 0.11%.

Markets had priced in a more aggressive hawkish tone from the Fed. Faster rate hikes might come if inflation runs higher for a more permanent time. The short-dated bond yields fell after the meeting minutes were released.

Nine out of the 11 sectors in the S&P 500 closed higher. Tech shares underperformed. Facebook parent Meta Platform fell 2% after Google announced it would change its privacy policy on its Android devices, a similar move to Apple. The social giant’s market cap is now below $US600 billion, a 40% drop from its November peak at $US1 trillion. Google parent Alphabet gained 0.91%.

On the earnings front, Roblox plunged 16% after the gaming company reported disappointing fourth-quarter earnings. Airbnb jumped 3.7% amid a strong quarterly performance and future guidance. Shopify sank 16% after the e-commerce company weakened growth for the first quarter.

Nvidia shares were down slightly in after-hours trading after the chipmaker beat on earnings expectations. Cisco shares jumped 5% after-hours after a strong earnings report.

The US January retail sales increased 3.8% from a month ago, a significant improvement from the 2.5% decline in December, better than the forecast of 2.1%. Both high inflation and online shopping contributed to the strong figure.

Treasuries

The short-dated bond yields fell sharply amid a less aggressive statement from the Fed meeting. The 2-year Treasury yield dipped to 1.514% from 1.575% the previous day. The 10-year US Treasury yield fell slightly to 2.036%.

Commodities

Gold futures gained $US17, to $US1,873, supported by a weakened US dollar.

WTI crude oil futures slid 1.31%, to $US90.86 as investors continue to assess the situation between Russia and Ukraine.

Currencies

USD weakened further, with the US bond yields falling. The commodity currencies including NZD and AUD, were both up 0.6% against the greenback, amid positive outlooks for the borders reopening. Euro continues to push higher against the USD amid cooling geopolitical tensions in the region.

Cryptocurrencies

The leading cryptocurrencies were slightly higher, with bitcoin holding above $US44,100 and Ethereum was at $US3,150.


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