FINANCIAL WEEK IN A GLANCE: KEY TRENDS

A stock bounce reversed in Asia on Wednesday, commodities sank and the Dollar climbed amid ever-louder warnings that Federal Reserve monetary tightening may lead to an economic downturn. An Asia-Pacific share Index shed over 1%, with Chinese technology equities among the worst performers. US and European futures declined as brief optimism from a Tuesday jump in the S&P 500 and Nasdaq 100 evaporated.

The oil price weakened significantly on Friday with Brent and WTI futures down -5.6% to $113.12 and -6.8% to $109.56 respectively, giving the first weekly decline in more than a month, as the dollar index rose to its highest level since December 2002, making oil more expensive for non-dollar buyers and also on concerns that sharper interest hikes could slow global growth and weaken energy demand. This week oil tumbled to roughly $105 a barrel and iron ore slid.

US equities soared on Tuesday, rebounding from last week’s deep sell-off as investors searched for signs of a potential bottom. The S&P 500 Index closed up 2.45% in New York, recording the biggest daily jump since 27 May. All of the 11 major industry groups closed higher, with energy and consumer discretionary sectors leading gains. The tech-heavy Nasdaq 100 Index climbed 2.49%, while the blue-chip Dow Jones Industrial Average advanced 2.15% — its steepest jump since 4 May.

Tesla Inc. and Diamondback Energy Inc. were the top two gainers in the S&P 500, while Apple Inc., Tesla, Microsoft Corp. and UnitedHealth Group Inc. contributed most to the Index’s advance.

The S&P 500 slid 5.8% last week, sinking to levels last seen in late 2020. But, despite the enthusiasm on Tuesday, in the absence of a real optimistic catalyst, the exuberance risks evaporated as the week progresses.

President Joe Biden on Sunday reiterated that a US recession isn’t “inevitable.” But strategists at Morgan Stanley and Goldman Sachs said equities may have further to fall as they have yet to fully price in the risk of a recession. Meanwhile, investors will be closely watching comments from various Fed officials.

Housing stocks rose after Lennar Corp. reported better-than-expected quarterly orders and profit margin.

Stocks related to cryptocurrencies gained on Tuesday as the price of Bitcoin continues to hold above $20,000 amid a tentative recovery and hopes that prices have bottomed.

The Eu’s executive recommended Ukraine and Moldova become candidates for EU membership, reaffirming EU support for two countries at significant territorial threat from Moscow. The leaders of Germany, France, Italy and Romania visited Kyiv at the weekend and emphasised their support for Ukraine’s EU membership, albeit the process of joining normally takes years.

The weekend brought bad news for President Macron of France as despite recently scoring a decisive reelection as President, his Ensemble alliance has fallen well short of achieving an absolute majority in the second round of elections for parliament, with a leftist alliance under Eurosceptic Jean-Luc Melenchon and also the National Rally of Marine le Pen performing well.

Markets:

  • S&P 500 Index up 2.40%
  • Dow Jones Industrial Average up 2.10%
  • NASDAQ Composite Index up 2.50%
  • Russell 2000 Index up 1.70%
  • 11 of 11 main S&P 500 sectors closed higher
  • Energy up 5.10%
  • Consumer discretionary up 2.80%
  • US Generic Govt 10-Yr up 2.30%
  • Bloomberg Dollar Spot Index (Rebased Version) down 0.20%

Currencies:

  • The Bloomberg Dollar Spot Index rose 0.20%
  • The Euro was at $1.0498, down 0.30%
  • The Japanese Yen was at 136.36 per Dollar, up 0.20%
  • The offshore Yuan was at 6.7254 per Dollar, down 0.50%

Bonds:

  • The yield on 10-year Treasuries fell four basis points to 3.24%
  • Australia’s 10-year bond yield fell seven basis points to 4.00%

Commodities:

  • West Texas Intermediate Crude was at $105.44 a barrel, down 3.70%
  • Gold was at $1,826.51 an ounce, down 0.40%

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