Moving markets today: Asia’s markets retreat, oil slides, gold hovers near record highs, Australia’s BHP hits three-month peak, RBA weighs rate hike in May meeting; focus on Fedspeak, BOE’s Bailey
In the US, stocks surged overnight, marking a strong start to the week and maintaining their position near all-time highs. However, Asian stocks saw a slight decline, while the dollar remained steady as investors awaited the release of the Federal Reserve’s meeting minutes to gauge potential interest rate adjustments. Concerns over high US interest rates led to a drop in oil prices due to fears of reduced demand. Meanwhile, gold prices saw a modest increase on Tuesday, staying close to a previous record high, boosted by optimism surrounding anticipated interest rate cuts by the Federal Reserve later in the year, supported by recent positive economic data. Meeting minutes revealed that the Reserve Bank of Australia (RBA) discussed the possibility of a rate hike during their May meeting. Additionally, Australia’s BHP Group saw its shares reach a three-month high as the deadline for a formal bid for Anglo American approached. Here are five key takeaways for your day.
RBA mulls rate hike in May meeting: minutes
In its May meeting, Australia’s central bank chose not to change interest rates, aiming to avoid making too many small adjustments to its policies. However, it acknowledged the potential need for a rate hike if inflation turned out to be higher than anticipated. The minutes from the meeting, released on Tuesday, revealed that the Reserve Bank of Australia (RBA) discussed the possibility of raising its 4.35 per cent cash rate. This consideration came as recent economic data in Australia had been stronger than predicted, and there were increased concerns about inflation.
BHP peaks at 3-month high amid imminent Anglo bid deadline
Australia’s BHP Group shares hit a three-month high on Tuesday as the deadline approached for the company to formally bid for rival Anglo American. Anglo had recently turned down BHP’s improved $43 billion takeover offer, Reuters reported.
According to UK takeover rules, BHP has until 1700 GMT on Wednesday to submit a binding bid for Anglo American; otherwise, it will be barred from making another offer for at least six months. If both parties reach an agreement before the deadline, an extension could be granted.
Despite BHP’s efforts, Anglo has rejected its proposals twice, arguing that they still undervalue the company significantly.
Oil prices fall on concerns over extended US interest rates
Oil prices fell in early Asian trading on Tuesday, with Brent down 0.62 per cent to $83.19 and WTI down 0.64 per cent to $79.29 per barrel. On Monday, both benchmarks had fallen by less than 1 per cent as Federal Reserve officials indicated they were waiting for more signs of decreasing inflation before considering rate cuts.
Investors anticipate prolonged high US inflation and interest rates will reduce demand. Fed officials indicated they need more evidence of slowing inflation before considering rate cuts.
What’s coming up
On Tuesday, investors will be closely monitoring multiple speeches from top US central bank officials, starting with Governor Christopher Waller.
Bank of England chief Andrew Bailey is also scheduled to speak. In Europe, April’s German producer price data will be released, followed by the eurozone’s current account and trade balance figures later in the morning.
Additionally, investors will be scrutinizing Nvidia’s earnings to see if the AI chip leader can continue its strong growth and stay ahead of its competitors.
Asian markets pull back as commodity prices climb
The S&P 500 edged up 0.09 per cent to close at 5,308.13, while the tech-heavy Nasdaq Composite set a new closing record at 16,794.87, driven by gains in four of the Magnificent Seven groups.
Meanwhile, the Dow Jones Industrial Average dropped 0.49 per cent to 39,806.77, pressured by a 4.5 per cent decline in JPMorgan’s shares after CEO Jamie Dimon expressed a “cautiously pessimistic” outlook and announced that the company wouldn’t repurchase its stock at current prices.
The technology sector led the gains among the 11 major S&P sectors, with the S&P 500 technology index rising 1.32 per cent, boosted by chipmakers like Nvidia, which saw a 2.49 per cent increase ahead of its quarterly results expected on Wednesday.
In Asia, Japan’s Nikkei 225 rose 0.2 per cent, adding to a 0.73 per cent gain from the previous day. Nasdaq futures slipped 0.1 per cent after the cash index climbed 0.65 per cent overnight to close at an all-time high. S&P 500 futures remained unchanged after Monday’s 0.1 per cent increase.
The Hang Seng Tech index dropped 2.2 per cent, with Li Auto plunging 17 per cent following a 37 per cent year-on-year decrease in net profits, despite being the first Chinese EV start-up to achieve an annual profit in 2023. Hong Kong’s broader Hang Seng index fell by 1.7 per cent.
Asian currencies weakened against the dollar in early trading, with the Korean won experiencing the steepest decline, down 0.5 per cent.
Bitcoin rose 2.07 per cent on Monday to $70,982, marking an 82.3 per cent increase from its yearly low of $38,505 on January 23. Ether, the cryptocurrency associated with the Ethereum network, increased by 5 per cent to $3,671.40.