Markets
Global Markets Report - 29 May
Australian shares were pointing up Saturday morning following a promising day on Wall Street.
Australia
Australian shares were pointing up Saturday morning following a promising day on Wall Street. While US leaders have yet to come to an agreement on the impending debt limit, the technology sector continued to shine.
ASX futures were 69 points, or 1.0% higher, as of 6:00am on Saturday, suggesting gains at the open.
US stocks climbed Friday as a potential deal to raise the debt ceiling began to take shape and a rally in technology shares gained steam.
The tech-heavy Nasdaq Composite led the way, gaining 2.2% as enthusiasm for companies developing artificial-intelligence technologies kept building. The S&P 500 advanced 1.3%, while the blue-chip Dow Jones Industrial Average rose 329 points, or 1%.
The Nasdaq, which is off to its best start in more than 30 years, rose 2.5% for the week, its fifth consecutive week of gains. The S&P 500 ended the week slightly higher, while the Dow dropped 1%.
Details of the debt deal still were not final as of Friday afternoon. But many investors were confident that an agreement would pass Congress ahead of June 1, the day that Treasury Secretary Janet Yellen has warned the government might not have enough cash to pay all its bills.
In commodity markets, Brent crude oil gained 1.0% to US$77.01 a barrel while gold added 0.3% to US$1,947.34.
Australian government bonds were higher, with the 2 Year yield increasing to 3.59% and the 10 Year yield rising to 3.73%. US Treasury notes were also higher, with the 2 Year yield climbing to 4.56% and the 10 Year yield leaping to 3.80%.
The Australian dollar moved up to 65.17 US cents from its previous close of 65.03. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, decreased to 98.05.
Asia
Chinese shares ended mixed, as investors adopted a wait-and-see mood following weaker-than-expected economic data and a stalemate in the US debt ceiling talks. Software makers and consumption stocks led gains. Beijing Kingsoft Office Software added 5.1% and Yonghui Superstores rose 0.7%. Energy stocks were among the session’s losers. China Shenhua Energy dropped 2.5% and Yankuang Energy Group fell 4.7%. The spat between China's two biggest auto manufacturers continued to ferment after Great Wall Motor filed a report Thursday with regulators claiming BYD did not meet emissions standards. Great Wall Motor dropped 4.3% and BYD shed 3.4%. The Shanghai Composite Index ended 0.35% higher at 3212.50 and finished the week 2.2% lower. The Shenzhen Composite Index rose 0.3% and the ChiNext Price Index dropped 0.7%.
The Hong Kong Stock Exchange was closed Friday to celebrate The Birthday of the Buddha.
Japan's Nikkei Stock Average rose 0.4% to close at 30916.31 amid hopes for artificial-intelligence demand, driven by Nvidia's robust outlook. The company's impressive Q1 results and $11 billion sales forecast for Q2 have blown investors' minds away, commented Ipek Ozkardeskaya, senior analyst at Swissquote Bank. Gains on the Japanese index were led by semiconductor- and electronics-related companies such as Sanken Electric, which climbed 9.6%, Screen Holdings, which rose 5.8%, and Tokyo Electron, which was 4.4% higher.
India's benchmark Sensex index gained 1.0% to end at 62501.69, as progress in US debt ceiling talks lifted global market sentiment. The Sensex reached multi-months high, boosted by technology and banking stocks. HCL Technologies rose 2.1% and Wipro increased 1.85%. Sun Pharmaceutical Industries jumped 2.75% after the company posted strong Q4 earnings. ICICI Bank rose 1.1% and Kotak Bank was up 0.8%.
Europe
European stocks climbed Friday on hopes that US leaders can agree on a debt ceiling resolution. The pan-European Stoxx Europe 600, the French CAC 40 and the German DAX each gained 1.2%.
"While there's some progress, with the two sides in Washington now down to arguing over the last $70 billion, it's still debatable whether lawmakers can pull off a deal before June 1," IG analysts wrote. "Today's data docket includes durable goods orders and the PCE price index."
The United Kingdom’s FTSE 100 closed up 0.7%, lifted by commodities-exposed stocks and AstraZeneca, on the back of increased investor optimism that the framework of a debt ceiling deal is starting to unfold "with more details expected to emerge over the weekend,” CMC Markets analyst Michael Hewson noted.
AstraZeneca shares closed up 1.2% after the pharma giant announced positive results from its Lynparza and Imfinzi drugs in a phase 3 trial for treatment of advanced endometrial cancer, Hewson added. Mining stocks were among the top performers in the British index, with Rio Tinto rising 3.5%, followed by M&G and Antofagasta, up 3.3% and 2.9%, respectively.
North America
US stocks climbed Friday as a potential deal to raise the debt ceiling began to take shape and a rally in technology shares gained steam.
The tech-heavy Nasdaq Composite led the way, gaining 2.2% as enthusiasm for companies developing artificial-intelligence technologies kept building. The S&P 500 advanced 1.3%, while the blue-chip Dow Jones Industrial Average rose 329 points, or 1%.
The Nasdaq, which is off to its best start in more than 30 years, rose 2.5% for the week, its fifth consecutive week of gains. The S&P 500 ended the week slightly higher, while the Dow dropped 1%.
Details of the debt deal still were not final as of Friday afternoon. But many investors were confident that an agreement would pass Congress ahead of June 1, the day that Treasury Secretary Janet Yellen has warned the government might not have enough cash to pay all its bills.
"If the market felt the deal wasn't going to get done, we would have started to see a precipitous sell-off by this point," said Brett Bernstein, CEO and co-founder of XML Financial Group.
Traders have reduced their bets that the Federal Reserve will cut rates this year, based on futures contracts. The central bank is scheduled to make its next decision on rates policy on June 14.
Investors continued to clamor for chip stocks as a way to bet on a spending boom on artificial-intelligence technology. Marvell Technology rose 32% after reporting earnings that topped expectations. Nvidia rose 2.5%, a day after its stock advanced 24% on the back of a strong forecast.
"We believe the AI hype is far more justified than some of the other tech-hype cycles," such as cryptocurrencies and nonfungible tokens, said Ross Mayfield, investment strategy analyst at Baird. The Nvidia forecast "was almost unprecedented in the magnitude to which it beat expectations. It really shows how immediately monetizable the demand is, " he added.
Ford Motor shares rose 6.3% after the automaker unveiled a partnership with Tesla on Thursday that will allow Ford's electric car customers to use Tesla's rapid charging stations. Tesla stock rose 4.7%.
Shares of beauty product retailer Ulta Beauty fell 13%, the biggest laggard in the S&P 500, after the company reported disappointing earnings and warned of moderating growth.
