Moving markets today: Asian markets ride Wall Street wave; oil, gold prices gain; US Philly Fed index, BT Group, Walmart in focus
Stocks in the US soared to new record highs as traders grew optimistic about potential interest rate cuts by the Federal Reserve following encouraging inflation data. This surge in the US market buoyed Asian stocks, which rallied on Thursday. Oil prices continued to climb, supported by signs of increased demand in the US, while gold prices saw a modest rise due to a weaker dollar and lower Treasury yields. In economic news, Japan’s economy contracted due to sluggish domestic demand, while Australia’s jobless rate rose to 4.1 per cent in April, diminishing the likelihood of a rate hike. Anglo American announced a halt in global hiring as part of its strategy revamp. Investors are closely monitoring key US economic reports, including jobless claims and the Philly Fed’s May index, along with updates from top Federal Reserve officials, including Megan Greene. Additionally, BT Group and Walmart are set to provide insights into consumer spending trends. Here are five key takeaways for your day.
Japan’s economy contracts as domestic demand falters
Japan’s economy contracted 2 per cent on an annualized basis in the first quarter, driven by sluggish household spending and reduced exports. Preliminary data from Japan’s cabinet office indicates a 0.5 per cent quarterly GDP decline. Persistent weak domestic demand, alongside falling real wages, poses challenges for the Bank of Japan, particularly as the yen’s depreciation pressures the central bank to accelerate rate increases.
Australian unemployment rate edges up to 4.1 per cent in April
Australia saw a stronger-than-anticipated rise in employment in April, but this was accompanied by an increase in the unemployment rate, indicating a gradual easing of the labour market. Data released by the Australian Bureau of Statistics revealed that employment grew by 38,500 compared to March, exceeding market expectations of a 23,700 increase, Reuters reported.
However, full-time employment experienced a slight decline of 6,100 during the same period. The unemployment rate rose to 4.1 per cent, up from a revised 3.9 per cent, surpassing market forecasts of 3.9 per cent. The participation rate edged up to 66.7 per cent, while there was no change in total hours worked in April.
Anglo American halts global hiring following strategic overhaul
Anglo American has decided to halt its global hiring efforts following its recent announcement to simplify its operations. According to an internal memo reviewed by Reuters, the company plans to refocus its efforts on copper, a crucial metal in the energy transition, while divesting or selling less profitable assets like coal, nickel, diamonds, and platinum. This strategic shift comes as Anglo aims to defend itself against a $43 billion bid from Australia’s BHP, the largest mining company globally. Despite rejecting BHP’s proposals twice, Anglo maintains that the offers significantly undervalue the company.
What’s on the radar
Thursday will be an important day for investors as they keep a close eye on several economic reports coming out in the United States. Of particular interest are the latest updates on weekly jobless claims and the Philadelphia Federal Reserve’s regional manufacturing sector index for May. Additionally, data for April covering housing starts, import prices, and industrial production are on the agenda.
Moreover, four notable Federal Reserve officials are scheduled to deliver speeches during the afternoon. The Bank of England’s Monetary Policy Committee external member Megan Greene also speaks at Make UK.
On the other side of the Atlantic, there aren’t any major economic releases expected in the UK or across the Channel.
In terms of corporate updates, BT Group is set to provide insights to investors on Thursday. Additionally, investors are eagerly awaiting Walmart’s quarterly report, which is anticipated to offer valuable information on consumer spending trends. Notably, Walmart’s shares experienced a slight decline, marking the third consecutive day of losses.
Asia joins Wall Street rally
On Wednesday, the S&P 500, a major stock market index, had a good day, rising by 1.2 per cent and reaching a new high of over 5,300 points for the first time. The sectors that did particularly well were technology, real estate, and healthcare, while consumer cyclicals were the only ones to see a dip. Over in the tech-heavy Nasdaq Composite, there was another record-breaking day with a 1.4 per cent increase. The Dow Jones index also made progress toward hitting the 40,000 mark, and the Russell 2000, which focuses on smaller companies, reached its highest level since late March, climbing by 1.1 per cent.
Some individual stocks stood out too. Nvidia was a top performer, rising by 3.6 per cent, followed by Microsoft and Apple with gains of 1.7 per cent and 1.2 per cent, respectively. Super Micro Computer Inc. saw a massive 15.8 per cent surge, as investors viewed it as a promising bet in the growing artificial intelligence sector.
Looking at Asia, markets in Hong Kong and Australia saw positive movements, while Japan’s market initially rose but ended up with a more modest gain due to concerns over earnings reports and currency fluctuations. In particular, rumours about China possibly buying properties for public housing boosted the Hang Seng Mainland Properties index by 4.4 per cent.
The dollar weakened slightly against major currencies, hitting a five-week low. In commodities, gold prices continued to rise, nearing their previous record high, while oil prices also saw gains.