S&P 500 off session lows after hitting bear market territory, Asian markets set to fall

Asian equity markets are expected to open lower following another wild session in the US stocks overnight. The S&P 500 cut losses at the close after falling toward a bear market. The Dow Jones Industrial Average declines for the six trading days in a row. Nasdaq failed an early rebounding attempt, initially up 1.6%, but managed to finish slightly higher at the close.

The US April producer price index rose 11% annually, suggesting the factory-gate price pressure stays elevated after a hotter-than-expected CPI data reported yesterday. The broad sentiment remains fragile as investors believe a global economic downfall cannot be avoided at the back of elevated costs of living, rising rates, and Covid-induced growth disruption in China. 

AU and NZ day ahead

The local equity markets will remain under pressure but maybe more resilient as the broader selloff seems to be deescalating. After all the bad news and extreme fears, the free fall of the bear markets will hopefully take a breather.

The S&P/ASX futures dipped 0.07%, pointing to a lower open in the ASX. All of the 12 sectors in the ASX finished in red on Thursday, with the information technology sector tumbling 8.7%. The benchmark index fell below the 7000-mark, to 6,941, or a 6.76% drop year to date, well outperforming its US peers. But the downtrend is still in place, which may take the index to go lower to its lowest level of 6,800 seen on the 27 January.

No signs for the NZX 50 for a bottom reversal yet. The local inflationary pressure may worsen in the second quarter according to the RBNZ’s survey on Thursday, which indicates the cost of living may continue to rise. The Reserve Bank dedicates to fighting inflation with more aggressive rate hikes.

US

Dow (-0.33%), S&P 500 (-0.13%), Nasdaq (+0.06%), Russel 2000 (+1.24%)

Sector performance

Winners: Health Care (+0.93%), Consumer Discretionary (+0.80%), Real Estate (+0.74), Technology (-3.39%), Communication services (+0.51%), Industrials (+0.14%), Energy (0.10%).

Losers: Utilities (-1.16%), Information Technology (-1.14%), Financials (-0.71%), Materials (-0.19%), Consumer Staples (-0.06%).

Stocks performance

Mega-caps were mixed: Meta Platforms Inc. (+1.31%%), Netflix Inc (+4.8%),

Apple (-0.67%), Microsoft (-2.03%), Alphabet (-0.67%), Amazon (-1.41%), Tesla (-0.87%), Nvidia (-2.77%).

Big banks all finish lower on recession fears: Citigroup Inc. (-2.26%), Wells Fargo (-1.76%), Goldman Sachs (-0.63%), and JPMorgan Chase (-0.09%).

Company news

Robinhood shares jumped 30% in the after-hours trading after the CEO of crypto exchange FTX buys a 7.6% stake.

EU

The Europe major indices fell on the broad risk-off sentiment caused by crashing movements in the risk assets on recession fears. Read more

The Stoxx 50 (-0.94%), FTSE 100 (-1.56%), DAX (-0.64%), CAC 40 (-1.01%).

Commodities

Crude oil prices finished higher as energy seems the only asset that is immune to the broad selloff but may remain under pressure in a scenario of recession.

WTI: US$106.65 (+0.89%), Brent: US$107.97 (+0.46%), Natural Gas: US$7.68 (+0.43%)

Precious metals slump on a sell-everything sentiment. The strong USD provides ongoing pressure on the base metals.

Spot Gold: US$1,821.91 (-1.78%), Spot Silver: US$20.69 (-4.26%)

Algaculture commodities continue to rise on war-induced supply concerns.

Wheat: US$1,170 (+5.12%), Soybean: US$1,614 (+0.45%), Corn: US$791 (+0.32%).

Currencies

US dollar index hits a 20-year high. Japanese Yen continued to rise, along with the bonds rally as investment funds flight for safety assets. The Eurodollar hits a fresh 5-year low against the greenback, heading to parity. CHF slumps to the parity level against the USD.

US dollar index: 104. 80 (+0.90%)

EUR/USD: 1.0375

USD/JPY: 128.39

USD/CHF: 1.0022

USD/CAD: 1.3047

AUD/USD: 0.6853

NZD/USD: 0.6226

Treasuries

Bonds yields continue to fall on risk-off trades.

US 10-year: 2.85%, US 2-year: 2.58%.

Germany bund 10-year: 0.84%, UK gilt 10-year: 1.70%.

Australia 10-year: 3.42%, NZ 10-year: 3.62%.

Cryptocurrencies

The Crypto markets bounced off session lows after the broad collapse caused by the so-called stablecoin, TerraUSD’s slump. Terra traded at 0.4873, and the relating token, Luna, slumped 99%, to $0.0073 in the last 24 hours. According to Bloomberg, “Terraform Labs restarted the Terra blockchain following a software update to help avoid attacks against the network in the wake of the collapse of its algorithmic stablecoin and the related Luna token that had roiled cryptocurrency markets.”

Bitcoin: $28,285(+1.23%)

Ethereum: $1.902(-5.31%)

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