AAsian markets are expected to open lower on low liquidity as US stock markets closed on the Memorial Day holiday. Broad equity markets extended gains on Monday amid optimism over China’s reopening, with trade hub Shanghai gradually easing lockdowns from tomorrow. Both the Nikkei and Hang Seng rose more than 2%, while major EU indices topped one-month highs after last week’s rally, led by retail stocks. Cryptocurrencies rallied sharply amid dip buys, with Bitcoin surging more than 7% to above $31,000.
Crude oil prices, however, continued to rise to 14-year highs as EU countries reached an agreement to partially ban Russia’s oil, which does nothing to ease rising inflation in a bid to lower the cost of living. It will be interesting to see how the US markets drive broad sentiment tonight as they open after the holidays.
AU and NZ day ahead
S&P/ASX futures fell 0.12%, suggesting a slightly lower open for the ASX. The benchmark index had a very strong day on Monday, up 1.45%, driven by large miners and consumer discretionary stocks amid China’s reopening optimism. Bubs rose 44% after the FDA approved infant formula shipments to the United States. A2 milk rose 10% in hopes of reaching a similar deal with the US as the formula maker submitted a supply application to the FDA. In addition, green stocks could take a ride as the Labor Party wins a majority of seats in Parliament.
The NZX 50 was up 0.39% on the open. Local markets are set for another resilient day, taking advantage of tailwinds from global markets. A2 milk will be in the spotlight today after rising 10% on Monday. Fonterra shares are also rising due to a spillover effect. RBNZ warns that the local economy will have a “soft landing” while economists are unconvinced by the narratives.
A range of local economic data including April Building Permits and May Business Confidence in ANZ will be in focus today. China’s manufacturing and non-manufacturing PMIs for May will also be influential data for the region.
US
US markets closed for a holiday on Monday. The futures markets increased slightly. Dow Jones Industrial Average futures were up 0.36%, S&P 500 futures were up 0.52% and Nasdaq futures were up 1.04%.
Europe
Broad European equity markets rallied, led by retail stocks. Stoxx 50 (+0.86%), FTSE 100 (+0.19%), DAX (+0.79%), CAC 40 (+0.72%). Continue reading
raw materials
Crude oil prices continued to rise, hitting a two-month high. EU members have agreed to embargo Russia’s sea transport but rule out pipeline delivery to keep supplies going to Hungary, which EU Council President Charles Michel said would block two-thirds of oil supplies from Russia.
WTI: $115.07 (+0.98%), Brent: $121.67 (+2.24%), Natural Gas: $9.52 (+5.55%)
Precious metals went into a range move as haven demand eased.
COMEX Gold Futures: $1,852 (+0.065%), COMEX Silver Futures: $22.00 (-0.41%)
Agricultural products were mostly higher due to supply concerns.
Wheat: $1,157.50 (+1.25%), Soybeans: $1,732.25 (+0.33%), Corn: $777.25 (+1.60%).
currencies
The US dollar continued to fall as bond yields continued to fall. Commodity currencies continued to rise as traders see increasing demand from China as the country slowly eases lockdowns in major cities. The Eurodollar also strengthened further on expectations that the ECB will hike interest rates in July before CPI data is released later this week.
(See the following exchange rates at EAST 7:30am, Bloomberg)
US Dollar Index: 101.34 (-0.36%)
EUR/USD: 1.0776
GBP/USD: 1.2651
USD/JPY: 127.60
USD/CHF: 0.9578
USD/CAD: 1.2658
AUD/USD: 0.7193
NZD/USD: 0.6557
treasuries
EU and Australian bond yields were higher while US markets closed.
10-year US bonds: 2.74%, 2-year US bonds: 2.484%.
10-year German Bunds: 1.05%, 10-year UK Gilts: 1.987%.
Australia 10 years: 3.25%, New Zealand 10 years: 3.572%.
cryptocurrencies
Cryptocurrencies rallied sharply Monday amid dip buys, suggesting risk sentiment is recovering quickly after leading tokens plunged to their lowest levels since July 2021, where survival aids lie from a technical perspective. The global market cap has increased by 7.29% in the last 24 hours to $1.31 trillion. Bitcoin surged more than 7% to above $31,000 and Ether jumped 9.6% to just under $2,000. Cardano outperformed the major tokens, up 17%.
(See below prices at AEST 8:36 according to Coinmarketcap.com)
Bitcoin: $31,638.15 (+7.56%)
Ethereum: $1,987.59 (+9.57%)
XRP: $0.4146 (+6.68%)
Cardano: $0.5628 (+17.37%)
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