Moving markets today: Asian stocks climb on tech strength from strong US earnings, oil prices up; BoJ keeps interest rate unchanged, Microsoft and Alphabet shares surge, All eyes on US PCE inflation data and ExxonMobil, NatWest earnings
Wall Street experienced a decline, reacting to news of slower-than-expected US economic growth and ongoing concerns about inflation. This was further aggravated by disappointing results from Meta Platforms, leading to a sell-off in major stocks. However, Asian markets cautiously rose amidst this backdrop. Oil prices saw an uptick following reassurances from a US official regarding economic challenges. Gold prices, on the other hand, were set for a weekly decline ahead of US inflation data. In more positive news, Microsoft outperformed Wall Street’s expectations in the third quarter, driving its shares up over 4 per cent in after-hours trading. Similarly, Alphabet reported a notable 15 per cent increase in first-quarter revenue and announced its inaugural dividend of 20 cents per share, alongside a significant $70 billion stock buyback program. This announcement propelled Alphabet’s shares up by over 11 per cent in after-hours trading. The Bank of Japan keeps its key interest rate steady at 0-0.1 per cent, as expected. Investors are eagerly awaiting the release of US March personal consumption expenditure (PCE) data, which serves as the Federal Reserve’s preferred inflation gauge. Here are five key takeaways for your day.
Bank of Japan holds interest rate steady
At its April monetary policy review meeting, the Bank of Japan (BoJ) decided to keep the key interest rate unchanged at 0-0.10 per cent. This decision was in line with what the market had anticipated. It’s worth noting that in March, the central bank raised rates for the first time since 2007, marking the end of Japan’s era of negative interest rates that began in 2016.
UK consumer confidence hits two-year high: GfK
British consumers are feeling better about the economy and their own financial situations this month, according to a recent survey. The GfK consumer confidence index, a measure of how optimistic or pessimistic people are about their finances and the overall economy, rose to -19 in April from -21 in March.
This matches the level seen in January, which was the highest since January 2022. Economists had expected a slightly smaller increase to -20. A year ago, the index was much lower at -30, indicating a notable improvement in consumer sentiment over the past year.
What changed for the market while you were sleeping?
Microsoft exceeded the expectations of Wall Street in the third quarter, both in terms of revenue and profit, thanks to the widespread integration of artificial intelligence in its cloud services. Consequently, the company’s shares surged by more than 4 per cent during after-hours trading.
Meanwhile, Alphabet saw a 15 per cent increase in first-quarter revenue and announced its very first dividend of 20 cents per share, alongside a hefty $70 billion stock buyback program. This positive news propelled its shares up by over 11 per cent in after-hours trading.
However, BHP faced a 4 per cent decline in its shares as Anglo-American shareholders expressed dissatisfaction with the perceived low offer.
Snap, on the other hand, witnessed a remarkable surge of over 30 per cent in its shares following better-than-expected earnings attributed to heightened demand for its advertising services.
Conversely, International Business Machines (IBM) experienced an 8 per cent decline in its shares after announcing a $6.4 billion deal to acquire HashiCorp, alongside first-quarter revenue that fell short of estimates.
Southwest Airlines saw a nearly 7 per cent decrease as it revised down projections for new aircraft deliveries from Boeing for the third time in 2024.
Caterpillar’s shares also dropped by 7 per cent after revising down its second-quarter sales forecasts due to easing demand for its construction equipment following last year’s boom.
Meta disappointed with its results, causing its shares to plummet by nearly 11 per cent, negatively impacting market sentiment along with three other Magnificent Seven stocks – Alphabet, Amazon.com, and Microsoft – all finishing lower.
However, both Alphabet and Microsoft saw their shares rise during extended hours of trading after surpassing Wall Street estimates in their quarterly reports.
Conversely, Intel’s forecast of second-quarter revenue and profit below market estimates led to an 8 per cent decline in its shares during extended-hours trading.
What’s coming up
Later today, the US Personal Consumption Expenditures (PCE) index for March, which is the Federal Reserve’s favoured measure of inflation, will be released.
Additionally, several companies, including oil giants ExxonMobil and Chevron, are gearing up to disclose their most recent earnings figures.
Asia stocks gain amid currency weakness
The Dow Jones Industrial Average experienced a nearly 1 per cent decline, settling at 38,085.80, alongside losses in the S&P 500 and Nasdaq Composite, which dropped to 5,048.42 and 15,611.76, respectively.
Early trading in Asian markets saw a positive trend, with Hong Kong’s Hang Seng index leading the gains for the fifth consecutive day, rising by 1.3 per cent. Notably, Chinese state-owned energy giant Cnooc saw a significant increase of 4.6 per cent. The Hang Seng index’s performance throughout the week reached a notable 7.8 per cent gain, potentially marking its strongest week since November 2022.
Currency markets witnessed a weakening of the South Korean won and Australian dollar against the US dollar, while the yen traded at ¥155.60 per dollar, marking its lowest level in decades.
In the realm of US Treasury yields, rates surged to five-month highs in the previous session and remained elevated in Asian trading. The two-year yield approached 5 per cent, while the benchmark 10-year yield stabilized at 4.7019 per cent. Despite weaker US growth, the dollar experienced a slip, hovering around 105.59 on Friday.
Turning to commodities, Brent crude rose by 0.37 per cent to $89.34 per barrel, and US crude gained 0.33 per cent to $83.85 per barrel. Meanwhile, gold prices remained steady at $2,331.64 per ounce.