GLOBAL MARKETS DJIA 34861.24 153.30 0.44% Nasdaq 14169.30 -22.54 -0.16% S&P 500 4543.06 22.90 0.51% FTSE 100 7483.35 15.97 0.21% Nikkei Stock 28049.77 -100.07 -0.36% Hang Seng 21598.37 193.49 0.90% Kospi 2725.31 -4.67 -0.17% SGX Nifty* 17231.50 40.5 0.24% *Mar contract USD/JPY 122.91-92 +0.71 Range 123.06 121.98 EUR/USD 1.0952-55 -0.25 Range 1.0990 1.0952 CBOT Wheat May $11.022 per bushel Spot Gold $1,947.42/oz -0.5% Nymex Crude (NY) $112.99 $0.65 US STOCKS
U.S. stocks continued their rebound for a second straight week, but rising interest rates threaten to temper their gains.
The S&P 500 broad stock market index and the tech-heavy Nasdaq Composite both ended the week up more than 1%, as investors grew more confident that the U.S. economy will withstand the escalating war in Ukraine and the Federal Reserve’s plans to lift interest rates.
The moves follow last week’s rise of more than 6% for the S&P 500 and more than 8% for the Nasdaq.
Still, stocks were mixed during Friday’s session in response to a fresh surge in bond yields, a sign that higher rates will continue to ripple through markets. The S&P 500 climbed 0.5%, but the Nasdaq Composite dropped 0.2%. The Dow Jones Industrial Average rose 0.4% for the day and added 0.3% for the week.
Forecasters have been predicting that the Federal Reserve will lift interest rates faster than it currently projects to clamp down on inflation that remains at a multidecade high. Economists at banks including Citigroup and Bank of America raised the prospect that the central bank will lift rates by half a percentage point at a time, in contrast to this month’s quarter-point increase.
“An additional rally from here could prove to be self-correcting because it could bring out the possibility of more and larger rate hikes,” said Doug Ramsey, chief investment officer at Leuthold Group.
At the same time, the war has driven concerns about inflation and disruptions to commodity supplies.
“Markets are trying to price something that is basically impossible to price, as part of what’s going on in the world depends on Putin’s thinking, which nobody knows,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “The longer the conflict lasts, the higher the upside to inflation, the lower the downside to growth. It’s massively, radically uncertain.”
Japanese stocks declined, dragged by falls in electronics and chemical stocks, as recent gains in commodity prices raised concerns about higher costs of raw materials. Investors remain focused on the war in Ukraine and its impact on commodity prices. The Nikkei Stock Average was down 0.6% at 27989.06.
South Korea’s Kospi fell 0.6% to 2713.76 in early trade, dragged by internet and tech stocks. A recent chorus of U.S. Fed officials supporting aggressive rate increases to tame inflation is sapping risk appetite and undermining investor sentiment with tech stocks in focus, said an NH Futures analyst. USD/KRW was 0.5% higher at 1,224.50 on increased risk aversion.
Hong Kong’s Hang Seng Index fell 0.6% to 21269.70 amid growing geopolitical risks such as the war between Russia and Ukraine. However, losses may be limited by positive earnings from some Hong Kong-listed Chinese companies including Meituan, KGI Research said. The Hang Seng TECH Index was down 1.4% at 4315.93.
Chinese stocks were lower in early trade, extending a broad downturn recently as U.S.-China tensions rose over the Russia-Ukraine war. Central China Securities said the market has likely reached its bottom but valuations may consolidate at current levels before any meaningful recovery could take place. The brokerage said it thinks more opportunities can be found in the agriculture and pharma sectors, which could respectively benefit from fast inflation and higher pandemic-related demand. The benchmark Shanghai Composite Index was down 0.7% at 3191.19, while the Shenzhen Composite Index shed 1.1% to 2090.99. The ChiNext Price Index dropped 1.2% to 2605.80.
NZD/USD seems ensconced in a comfortable groove in the mid-to-high 0.69s, Australia & New Zealand Banking Group said, citing recent trading. “Very little is going on domestically but markets now pretty fully priced for upcoming hikes (although 50bp hikes aren’t fully priced in, a high risk of them is),” ANZ said. The RBNZ decision on April 13 is likely to be the next jolt for rates expectations. ANZ said it’s a different story in Australia, where the odds of RBA hikes continue to grow, with a full hike priced in by June and more than six increases priced in by the year-end. “This is actually what seems to be driving the NZD at present, and it looks like the question is, does NZD/USD break higher or NZD/AUD break lower? Or will it be a comfortable combination of the two?” ANZ said.
Gold fell in the morning Asian session amid slightly higher Treasury yields and a stronger USD. However, with war rather than peace looking more possible for the foreseeable future, gold remains well-supported on dips, SPI Asset Management said. And with oil prices more likely to stay higher for longer, inflation and the real possibility of stagflation hitting the global economy also continues to support gold, SPI Asset Management added. Spot gold was down 0.5% at $1,947.42/oz.
Oil declined in the morning Asian session after hitting strong technical resistance on charts. Brent has declined into today’s Asia open, after encountering technical resistance at the $118/bbl level last week, which will remain a key level to overcome ahead, IG said. Several catalysts to support further upside on crude oil prices remain intact, which include a deadlock in the Iran nuclear deal and any escalation in attacks on Saudi Arabia’s oil facilities, IG added. Front-month WTI crude oil futures were 3.5% lower at $109.96/bbl; front-month Brent crude oil futures were 3.3% lower at $116.70/bbl.
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(END) Dow Jones Newswires
March 27, 2022 23:16 ET (03:16 GMT)
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