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Market Update: Positive Tech Earnings Rescue US Indices Worried by Banking Woes; Aussie CPI Meets Expectations as AUD Sinks to Mid-March Lows
Today's important market events:
[USD] Core Durable Goods Orders (MoM - Mar) - 15:30 CEST
[USD] Crude Oil Inventories - 16:30 CEST
The majority of stocks in the Asia-Pacific region registered a decline following the losses incurred on Wall Street, as concerns regarding the banking sector resurfaced, with shares of First Republic Bank falling by 50%. According to the Financial Times, First Republic is currently struggling to find a viable solution, including the sale of all or part of the bank.
On a positive note, US equity futures experienced some relief due to strong earnings reports from major tech companies. After-hours trading saw Alphabet rise by 1.7%, while Microsoft soared by 8.5%.
However, European equity futures are indicating a weaker start, with Euro Stoxx 50 futures down 0.6% following a 0.5% dip in the cash market yesterday. The DXY has remained steady on a 101 handle, while EUR/USD has slipped back below 1.10. In Australia, AUD lags marginally post-inflation data.
The ASX 200 was somewhat subdued, as investors assessed mixed inflation data which showed that headline CPI readings for Q1 exceeded expectations, but all other components came in lower than expected. This supported the view that the economy has passed peak inflation. Meanwhile, the Nikkei 225 declined due to pressure in the banking sector and disappointment following the failed lunar module landing which resulted in a glut of sell orders for ispace shares. The Hang Seng and Shanghai Comp were mixed, with early weakness in tech following US Republican senators' call for government measures to address Chinese cloud companies, including placing sanctions on Huawei Cloud and adding Alibaba Cloud to the export control list. However, it was also reported that China's State Council pledged to expand the export and import scale of key products and will properly respond to unreasonable foreign trade restrictions.
In the US, equity futures nursed some of the prior day's losses, with NDX futures boosted after tech giants Alphabet and Microsoft beat on their top and bottom lines. On the other hand, European equity futures indicate a weaker open, with the Euro Stoxx 50 future down 0.6% after the cash market closed lower by 0.5% yesterday.
Regarding FX, the DXY was flat and held on to the prior day’s gains, spurred by haven demand amid banking sector concerns and despite the fall in yields after the latest bout of disappointing US data releases. The EUR/USD languished below 1.1000 after the single currency succumbed to recent dollar strength. Meanwhile, GBP/USD traded range-bound, providing some respite from yesterday's slide which began above 1.2500. The USD/JPY remained contained after the Japanese currency recently benefited from haven flows and yield differentials.
In the Antipodeans, AUD/USD declined gradually, as the mostly softer-than-expected inflation data from Australia added slightly to market pricing for the Reserve Bank of Australia to pause on rates again next week. In fixed income markets, 10-year UST futures eased after pronounced bull steepening that was spurred by banking sector jitters and data. Bund futures remained afloat, with the recently reclaimed 135.00 level providing a base for prices overnight. Meanwhile, 10-year JGB futures tracked the recent gains in global counterparts and were unfazed by a softer 2-year auction.
In commodities, crude futures eked out gains after bullish headline private inventories, but upside was limited by the cautious mood. Spot gold was indecisive as the dollar took a breather, with resistance around the USD 2,000/oz level. Copper futures nursed some of the prior day's losses, with price action at the whim of risk sentiment. Lastly, European Commission VP Sefcovic said that 80 companies have signed up to the EU's platform for joint natgas purchases, which launched on Tuesday, according to the Financial Times.
Looking ahead, the market will focus on several key events, including German GfK, US Durable Goods & Retail Inventories, Riksbank Policy Announcement, BoC Minutes, Speech from ECB's de Guindos, and Supply from Germany & US. In addition, a number of notable companies, including Deutsche Boerse, UMG, Roche, Standard Chartered, Persimmon, GSK, Smith & Nephew, Meta, Boeing, Thermo Fisher, ADP & American Tower, are set to release their earnings reports.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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