Asia markets are set to open higher following a strong session on US markets. Tesla Motors led broader gains on the news that the electric carmaker plans for a stock split to pay a stock dividend to shareholders. The company’s shares jumped 8%.
Oil prices plunged on Shanghai’s covid lockdown in China. The de-escalation in the Ukraine crisis also pressed on oil prices, with face-to-face talks set to resume between Russia and Ukraine this week.
SPI futures are pointing to a 0.5% gain on the S&P/ASX 200 after the benchmark index closed at a fresh 10-week high on Monday, ahead of the Federal Budget tonight. It is widely expected the government will scale back the massive pandemic-era stimulus measures in its fiscal 2023 policy. The NZX 50 was up 0.1% in the first hour of trading. Mainfreight and Pushpay were both up 1.8% at the open, leading the local market's gains.
US and EU stocks
The risk-on sentiment continued to send US stock markets higher. The Dow Jones Industrial Average was up 0.27%, the S&P 500 climbed 0.71%, and the Nasdaq advanced 1.31%.
The consumer discretionary sector led broader market gains, led by Tesla. Most of the other mega-cap companies also finished higher, with Amazon up 2.3%, and Microsoft rising 1.8%. Coinbase surged 8% on news that the company may acquire 2TM, a Latin American crypto broker, along with a cryptocurrencies rally overnight. Meme stocks spiked: GameStop soared 24%, registering a nine-day winning session. AMC Entertainment surged 45%.
Energy was the biggest lagger, down 2.56%, as crude oil prices plunged. Both Occidental and Devon Energy were down more than 3%.
In Europe, major stocks closed in the green, thanks to the de-escalating geopolitical tension. The Euro Stoxx 50 was up 0.50%, the DAX rose 0.78%, and CAC 40 advanced 0.54%. The FTSE 100 was down 0.14%.
Treasuries
The major bond markets sell-off steepened into midday but cut losses after US markets opened on Monday. Both Australia and US short-term dated bond yields spiked as markets are pricing in a 50-basis point increase in the Fed’s next meeting.
The 10-year US Treasury yield jumped to 2.56% at an intraday high before pulling back to 2.46%. The 2-year Treasury yield surged to 2.80% before falling to 2.71%.
The Australia 5-year bond yield traded at 2.65% after it soared to 2.74% at a point, a new high since November 2014. The New Zealand 2-year swap rose to 3.25%, the highest since June 2015.
Commodities
Oil prices plunged more than 9% on concerns of dropping demands caused by a 9-day lockdown in China’s biggest commercial city, Shanghai. OPEC+ indicated to stick to a 400,000-barrels-per-day output increase in May despite the supply woes resulting from sanctions on Russia. The organization will meet on Thursday. The UAE energy minister insists that Russia is always part of the group. Brent finished at US$106.65 per barrel and WTI futures closed at US$103.42 per barrel.
Precious metals dropped sharply as risk-on sentiment pressured safe-haven demands, along with a strengthening US dollar. The NYMEX gold futures fell US$34.30, to US$1,919 per ounce. Silver plummeted 2.5%, to US$24.97 per ounce.
Currencies
The US dollar strengthened against most of the other major currencies in expectation of an extremely aggressive tightening approach from the Fed. USD/JPY soared to a fresh seven-year high at 123.83 after the Bank of Japan announced to buy unlimited 10-year JGBs to control the yield cap at 0.25%.
Commodity currencies lost steam on falling commodity prices. NZD was down 0.8% against the greenback, both AUD and CAD fell 0.2% against the USD. The British pound was down 0.5% against the USD and EUR/USD traded flat.
Cryptocurrencies
The crypto markets continue to rally as tech stocks rise. The total market cap rose to US$2.16 trillion, bitcoin was up 2.7%, to US$47,700, ethereum rose 4 %, to just under US$3,400, and cardano advanced 5.2%, to US$1.22. The three major digital coins were up by 15.87%, 16.42%, and 34.54% in the last seven days.
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