Moving markets today: Asia markets mixed following lacklustre Wall Street performance; focus on UK employment report, US Fed’s Powell speech, and Vodafone earnings
The S&P 500 saw a slight dip as investors paused after several weeks of gains, awaiting key US inflation data and earnings reports. A survey indicating consumer concerns about inflation added to the cautious mood. Meanwhile, Asian markets held near recent highs, but Japanese bond prices faced pressure as the central bank reduced its bond-buying program. Oil prices edged up due to a tighter supply outlook, while gold prices remained steady. In corporate news, Walmart is reportedly planning significant layoffs and relocations of corporate staff, according to the Wall Street Journal. Additionally, Reuters reported expectations that the Federal Reserve will cut the fed funds rate by 25 basis points in September. Investors will be closely monitoring the UK employment report before the markets open, as well as Federal Reserve Chairman Jerome Powell’s remarks later in the day. Here are five key takeaways for your day.
Walmart announces layoffs and relocations for corporate staff, says WSJ
The Wall Street Journal (WSJ) reported that Walmart is downsizing its corporate workforce by hundreds of employees and urging most remote workers to transition to office-based roles.
Furthermore, employees at Walmart’s smaller offices in Dallas, Atlanta, and Toronto are being encouraged to relocate to larger central hubs such as Walmart’s corporate headquarters in Bentonville, as well as offices in Hoboken or Southern California. Despite these changes, Walmart will still permit staff to work remotely part-time, as long as they primarily work from office environments.
US Fed set to lower rates by 25 basis points in September: Reuters
According to a Reuters report, a majority of 70 out of 108 economists predict that the US Federal Reserve will decrease the federal funds rate by 25 basis points in September.
Looking further ahead, 65 out of the same group of economists anticipate a 50 basis points reduction in rates by the Federal Reserve in 2024. Meanwhile, 17 economists foresee rate cuts exceeding 50 basis points, while one economist believes there will be no rate cuts at all.
Japan’s April wholesale prices stay firm as weak yen drives up imports
Japan’s wholesale prices remained stable in April, rising 0.9 per cent from a year earlier, in line with March’s increase. The corporate goods price index (CGPI), which measures inter-company pricing, surpassed market expectations, reflecting a 6.4 per cent surge in import costs due to the yen’s depreciation.
What’s coming up
Investors are gearing up for key UK labour market updates slated for Tuesday, eyeing clues on potential policy adjustments from Huw Pill, the Bank of England’s chief economist, and Megan Greene, an external member of the monetary policy panel, later in the week.
In the UK, all eyes are on the labour market data. Analysts expect the unemployment rate to edge up to 4.3 per cent from 4.2 per cent in the three months to March. Earnings growth is anticipated to dip to 5.5 per cent, with wages excluding bonuses falling to 5.9 per cent, marking the first time below 6 per cent since September 2022.
They’re also closely monitoring Wednesday’s release of US inflation data for insights into the Federal Reserve’s interest rate plans.
Today’s focus shifts to the Netherlands, where Jerome Powell, chair of the Federal Reserve, will participate in an event hosted by the Dutch central bank. Simultaneously, the US Department of Labor will unveil April’s producer price data.
Meanwhile, on the corporate front, attention is on Vodafone’s forthcoming fourth-quarter and fiscal year 2024 results.
Asian markets mixed, Hong Kong stocks surge amid Japanese bond sell-off
During the recent overnight trading session, the major US stock indices experienced varied movements: the Dow Jones Industrial Average dipped slightly by 0.21 per cent to 39,431.51 points, the S&P 500 showed a marginal decline of 0.02 per cent to 5,221.42 points, while the Nasdaq Composite managed to climb by 0.29 per cent to reach 16,388.24 points, supported by gains in four of the Magnificent Seven stocks.
Also, the Russell 2000, which focuses on smaller companies, eked out a modest gain of 0.1 per cent.
Within the S&P 500 index, only two out of its 11 major sectors saw positive changes on Monday.
Technology stocks led the way, with Apple notably contributing to the index’s overall performance. Noteworthy was the significant surge in GameStop shares, jumping by 74 per cent, fueled by the return of “Roaring Kitty,” a key player in the 2021 meme stock frenzy, to X.com after a hiatus.
Other heavily shorted stocks from the 2021 meme rally, such as AMC Entertainment and Koss Corp, also saw increases of 78 per cent and 36.7 per cent, respectively.
Across Asian markets, Japan’s Nikkei N225 remained stagnant, whereas Hong Kong’s Hang Seng index rose by 0.9 per cent. Notable gains were seen in the Hang Seng Mainland Properties index, up by 2.2 per cent, and the Hang Seng Tech index, which surged by 2.1 per cent.
Asian currencies, including South Korea’s, experienced a weakening trend against the US dollar, with the won sliding by 0.3 per cent to Won1,370.11.
In anticipation of potential rate hikes from the Bank of Japan and a slowdown in the central bank’s bond purchasing program, yields on Japanese government bonds saw an increase as traders adjusted their expectations.
Oil and gold prices remained relatively stable during this period, with Brent crude futures holding at $83.40 per barrel and spot gold maintaining its value at $2,339 per ounce.