Asian equity markets are set to slightly open lower after the US stocks failed in an attempt to rebound overnight. US stocks gave up early gains and finished lower after swinging between highs and lows, while tech shares struggled to shake off downside pressure amid microeconomic hardships. The chipmaker, Cisco tumbled 13.7% amid disappointing earnings. Bonds rose further on growing haven demands, while the USD weakened, boosting commodity prices, with both oil and gold rising strongly.

Sarcastically, the weakening economic data could promote bets of peaking inflation by pressuring consumers’ demands, and a less hawkish Fed’s tightening approach. The risk sentiment seems to be recovering after the retailer-triggered stock rout yesterday, with the broad equity markets buffering downside momentum. The rebounding in commodities and cryptocurrencies may suggest that we could see a stream of light at the end of a dark tunnel.  

AU and NZ day ahead

The S&P/ASX futures were down 0.13%, pointing to a slightly lower open in the ASX. The local equity markets may see some rebounding moves following broad commodities’ prices comeback. History tells that the nation’s shares tend to rally during election time according to Bloomberg’s stats. The Australian dollar took a ride on the USD’s weakness overnight, compounding with falling AU bond yields. AUD/USD strongly bounced back to above 0.70, testing the key resistance at 0.7050. The bulls look like taking the upper hand.

NZX 50 was up 0.31% at the open. The New Zealand dollar also rose along with other commodity currencies. Traders may eye the key resistance at 0.64 of NZD/USD for today’s trading.

The budge released yesterday suggests that the local economy faces challenges, with a widening deficit, which could decelerate the pace of rate hikes by the RBNZ. The Treasury sees a slowdown in the economic growth from the second half of the year.

US

The Dow Jones Industrial Average fell 0.75%, the S&P 500 slid 0.58%, and Nasdaq declined 0.26%. 

Sector performance

8 out of 11 sectors in the S&P 500 closed in red, with Consumer Staples stocks leading losses as retailer stocks were hit by weak performances. 

Winners: Materials (+0.68%), Healthcare (+0.22%), Consumer Discretionary (+0.13%)

Losers: Consumer Staples (-1.98%), Technology (-1.07), Communication services (-0.58%), Financials (-0.7%), Real estate (-0.2%), Energy (-0.28%), Utilities (-0.22%)

Stocks performance

Mega-caps mostly finished lower: Apple (-2.49%), Amazon (+0.1%), Microsoft (-0.42%), Alphabet (-1.43%), Meta Platforms Inc. (-0.58%), Tesla (-0.03%), Nvidia (+1.04%), Netflix Inc (+3.46%).

Consumer stocks fell further: Walmart (-2.74%), Target (-5.06%), Costco (-1.51%), Coca-Cola (-1.96%), Pepsi (-1.50%), The P&G (-2.30%).

Economic data

The jobless claims rose to a four-month high of 218,000, more than economists estimate, which may indicate that the US labor markets are approaching normal trends from the post-pandemic shocks.

EU

The broad European stock markets fell for the second session following the US stock rout yesterday. The Stoxx 50 (-1.36%), FTSE 100 (-1.82%), DAX (-0.90%), CAC 40 (-1.26%). Read more

Commodities

Crude oil prices rebounded strongly after a two-day sliding as risk sentiment is seen as signs of recovering, with the US dollar weakening on falling bond yields. While easing lockdown hopes bring optimism toward increasing fuel demands, traders also keep one eye on a potential meeting between US President Joe Biden and Saudi Arabia’s prince to discuss an output increase.

WTI: US$112.21 (+2.39%), Brent: US$111.31(+2.02%), Natural Gas: US$8.31 (-0.72%)

Precious metals rallied, supported by mounting safe have demands and a weakened US dollar.

Spot Gold: US$1,841.95 (+1.39%), Spot Silver: US$21.92 (+2.34%)

Algaculture products were mixed.   

Wheat: US$1,200.50 (-2.46%), Soybean: US$1,690.50 (+1.67%), Corn: US$783.25 (+0.22%).

Currencies

US dollar index closed lower for the last 4 out of 5trading days, down 0.91%, to 102.915. All the other currencies strengthened against the greenback. Haven currencies, including the Japanese Yen, Swiss Franc, and Eurodollar rebounded strongly. All the commodity currencies were up more than 1% against the USD.

(See the below FX rates at EAST 7:46 am, Bloomberg)

EUR/USD: 1.0582

GBP/USD: 1.2471

USD/JPY: 127.85

USD/CHF: 0.9692

USD/CAD: 1.2819

AUD/USD: 0.7045

NZD/USD: 0.6378

Treasuries

Bonds yields slid further on haven demands.

US 10-year: 2.837% US 2-year: 2.61%.

Germany bund 10-year: 0.945%, UK gilt 10-year: 1.862%.

Australia 10-year: 3.378%, NZ 10-year: 3.54%.

Cryptocurrencies

The leading cryptocurrencies rebounded as risk sentiment shows signs of recovering, also supported by a weakening US dollar. The whole market cap rose 2.56%, to US$1.28 trillion in the last 24 hours. The so-called stablecoin, TerraUSD, fell further, down 15.57%, to 0.000014 after a systematic collapse last week.

(See below prices at AEST 7:58 am according to Coinmarketcap.com )

Bitcoin: US$30,231.94 (+3.54%)

Ethereum: US$2,013 (+2.85%)

XRP: US$0.418 (+1.01%)

Cardano: US$0.5287 (+0.71)

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