Moving markets today: Asian stocks follow Wall Street lower as yields climb, oil prices fall; Salesforce shares plunge 15 per cent; US Q1 GDP, Auto Trader in spotlight
US stocks experienced a decline due to rising Treasury yields and apprehension surrounding potential adjustments to interest rates by the Federal Reserve. This downward trend extended to Asian markets on Thursday, accompanied by a decrease in bond prices as expectations mounted for sustained elevated global interest rates. Expectations for another negative session loomed over the London stock exchange, with FTSE 100 futures indicating a further downturn. Oil prices also faced downward pressure amid concerns about demand, with investors awaiting data on US crude stockpiles. Meanwhile, gold prices remained stable as investors awaited the release of key US inflation data, which could offer insights into the Federal Reserve’s future policy decisions. Thursday’s agenda retained its focus on the US, with various economic indicators and speeches from central bank officials scheduled throughout the day. Of particular interest was Friday’s scheduled release of April’s Personal Consumption Expenditure data, considered the Fed’s preferred measure of inflation, shaping expectations and strategies for market participants. Here are five key takeaways for your day.
UK car output drops again in April
British car production fell by 7 per cent year-on-year in April, marking a second consecutive monthly decline. This was due to manufacturers winding down older models and increasing the production of electric vehicles, Reuters reported.
The Society of Motor Manufacturers and Traders (SMMT) reported 61,820 cars produced, down from 66,527 units last year. Electrified vehicles made up 40.5 per cent of total production, with EVs seeing a modest 0.1 per cent increase over the previous year.
Australian business investment surges 1 per cent in Q1
Australian business investment surged in the March quarter, hitting a near nine-year high. This growth was driven by increased spending on data centres by telecom companies. Future investment plans were also revised upwards, indicating a positive long-term economic outlook, Reuters reported.
Data from the Australian Bureau of Statistics showed a 1.0 per cent increase in private capital spending, with a notable jump in spending on plant and machinery offsetting a slight drop in spending on buildings and structures.
While you were sleeping: Major market shifts and news
On Wednesday, a global bond sell-off gained momentum due to another underwhelming US Treasury auction. This caused the benchmark 10-year Treasury yield to spike to 4.64 per cent, its highest point since May.
After the market closed, Salesforce shares plummeted over 15 per cent as the company’s results and second-quarter revenue forecast fell short of expectations. Despite this, Salesforce shares had risen 0.7 per cent during the regular session.
In regular trading, Marathon Oil shares jumped 8.4 per cent following ConocoPhillips’ announcement of an all-stock acquisition deal valued at just over $15 billion. ConocoPhillips shares dropped 3.1 per cent. The energy sector overall fell by 1.8 per cent.
Airline stocks took a hit as well, with American Airlines leading the decline with a 13.5 per cent drop after lowering its second-quarter profit forecast.
On the positive side, Dick’s Sporting Goods saw a 15.9 per cent increase after raising its annual sales and profit forecasts, and Abercrombie & Fitch surged 24.3 per cent due to an improved annual sales growth forecast.
What’s coming up
On Thursday, all eyes will be on the US as several economic reports and central bank speeches are anticipated. The day kicks off with the second estimate of first-quarter GDP growth, followed by weekly jobless claims data and April’s pending home sales figures. Additionally, at least two key Federal Reserve officials are set to speak.
In the eurozone, the European Commission will release its May economic sentiment index, and a preliminary report on Spanish consumer prices for the same month will come out beforehand.
The UK has no major economic reports scheduled, but earnings from Auto Trader and British American Tobacco will draw attention. In the US, investors will be closely monitoring earnings reports from Costco and Marvell.
Asian markets and currencies slide following weak US bond auction
The S&P 500 dropped 0.74 per cent to 5,266.95, and the Nasdaq Composite, which focuses on technology stocks, fell 0.58 per cent to 16,920.58. The Dow Jones Industrial Average decreased by 1.06 per cent to 38,441.54. The Nasdaq retreated after surpassing 17,000 for the first time on Tuesday, while the small-cap Russell 2000 index declined by 1.5 per cent.
Investors are bracing for another tough session, with FTSE 100 futures indicating a 9-point drop following a 1.29 per cent decline yesterday.
Asian markets and currencies followed the US market downwards on Thursday after a weak Treasury auction led to a bond sell-off. Japan’s Topix index led the losses, dropping 0.8 per cent, and the Nikkei 225, heavy with exporters, fell 1.7 per cent. Stocks in Australia and South Korea also declined. In China, the CSI300 index eased by 0.25 per cent despite the IMF’s positive revisions to China’s GDP growth forecasts for 2024 and 2025. Hong Kong’s Hang Seng Index managed a small gain of 0.17 per cent.
The US dollar index rose 0.5 per cent against a basket of six major currencies as investors speculated that the Federal Reserve might keep interest rates high for a longer period. US equity futures slipped in early Asian trading after the S&P 500 closed below 5,300 on Wednesday, and the Nasdaq 100 experienced its worst day since May 1.
Asian currencies mostly weakened against the dollar, with the Indonesian rupiah and South Korean won leading the declines, dropping 0.4 per cent and 0.3 per cent respectively. The yen remained stable at around ¥157.40 in early trading.
Oil prices saw a slight uptick, recovering some ground lost on Wednesday amid concerns about weak US gasoline demand and the possibility of prolonged high interest rates. Brent crude held steady at $83.60 per barrel, and US crude edged up by 0.03 per cent to $79.25 per barrel. Spot gold decreased by 0.2 per cent to $2,334.15 an ounce.