Stock markets sold off, after a slide on Wall Street, with tech stocks in Hong Kong particularly under pressure. Tencent slumped after reporting no revenue and individual company reports aside markets are concerned by the impact of China’s zero Covid policy, the Ukraine war and fear that inflation will get out of control, despite aggressive central bank actions that are adding to the headwinds to the global recovery. Earnings reports from retail giants added to concerns that high inflation would slow global growth, with Target warning of a bigger margin hit due to rising fuel and freight costs as it reported its quarterly profit had halved. One day earlier, Walmart warned of similar margin squeezes. Bonds were supported in Australia and New Zealand, despite a decline in Australia’s jobless number. The 10-year Treasury yield has picked up 1.3 bp though and the Bund yield is up 0.6 bp at 1.01% in early trade. Oil rebounded to $107.90 whilst Gold appreciated to $1814. Australia’s unemployment rate fell to 3.9% – the lowest level in almost 50 years – as employment rose 4k over the month.
- USDIndex recovered to 103.88
- Equities – Nikkei lost -1.9%, the ASX -1.7%, while Hang Seng and CSI300 are down -2.5% and -0.2% respectively. USA100 cratered -4.73%, with the USA500 -4.03% lower, and the USA30 off -3.73%.
- Yields 10- and 30-year rates plunged over 11 bps intraday to lows of 2.875% and 3.065%, respectively.
- Oil down to 105.15 – Bloomberg cited “people familiar with the data” as saying that API data will report a drop of 5 million barrels in gasoline inventories for last week.
- Gold up to $1830.
- FX markets – GBP and EUR falling to parity against the Dollar. However, USDJPY has weakened to 128.15 after surging to a 20-year peak at 130.85 in late April.
Today – The calendar includes ECB Meeting Accounts, US Jobless Claims, New Zealand trade balance and Japanese inflation.
Biggest FX Mover @ (06:30 GMT) USOIL – Gapped down to 105.14, which filled up immediately. MAs have flattened, MACD signal line & histogram are negatively configured, RSI 38.56, H1 ATR 1.07, Daily ATR 5.45.
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Andria Pichidi
Market Analyst
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