26 May 2023

Economic Data Raise Possibility of Further Rate Hikes

Overnight Asia

A gauge of Asian shares was on course to snap a three-day losing streak, buoyed by the tech sector, while US equity futures slipped after artificial intelligence stocks fuelled a sharp rally in the prior session. Benchmark Indices rose in Japan, South Korea, India and Australia, and those for mainland China erased earlier declines. Hong Kong’s market was closed on Friday for a public holiday. European futures added 0.1%.

A gauge of the Dollar’s strength fell as investors continued to parse signals from US debt-ceiling talks as time grows short to avert a default. Treasury yields dropped fractionally in Asian trading after rising sharply on Thursday.

The Yen strengthened slightly versus the greenback while remaining near 140 level. Data on Friday indicated slowing inflation in Tokyo which supports expectations for continued divergence between the Bank of Japan and the Fed.

Elsewhere in markets, oil was steady after falling more than 3% on Thursday as Russia suggested OPEC+ wasn’t likely to change production levels at its next meeting. 

Copper and iron ore have both breached key levels this week, pulling down the Bloomberg Commodity Index. 

Key events this week:

  • US Consumer Income, wholesale inventories, durable goods, University of Michigan Consumer Sentiment, Friday

Some of the main moves in markets:


  • S&P 500 futures fell 0.10% as of 6.50 am London time. The S&P 500 rose 0.90%
  • Nasdaq 100 futures fell 0.10%. The Nasdaq 100 rose 2.50%
  • Japan’s Topix Index rose 0.10%
  • China’s Shanghai Composite Index rose 0.40%
  • Australia’s S&P/ASX 200 Index rose 0.20%


  • The Bloomberg Dollar Spot Index fell 0.20%
  • The Euro rose 0.10% to $1.0740
  • The Japanese Yen rose 0.20% to 139.76 per Dollar
  • The offshore Yuan rose 0.30% to 7.0712 per Dollar
  • The Australian Dollar rose 0.20% to $0.6515
  • The British Pound rose 0.10% to $1.2338


  • Bitcoin fell 0.40% to $26,371.99
  • Ether fell 0.30% to $1,804.17


  • The yield on 10-year Treasuries declined two basis points to 3.80%
  • Japan’s 10-year yield was little changed at 0.42%
  • Australia’s 10-year yield advanced three basis points to 3.73%


  • West Texas Intermediate Crude was little changed
  • Spot gold rose 0.40% to $1,949.37 an ounce

US Market Wrap

US equity Indices rallied on Thursday as Nvidia Corp.’s bullish sales outlook lifted investor sentiment, overshadowing concerns about the deadlocked debt-ceiling negotiations in Washington and a slew of hot economic data that raised the possibility of further interest rate hikes. The Nasdaq 100 Index jumped 2.5 to mark its best session in almost a month after Nvidia sparked a rally in semiconductor and AI-related companies by boosting its sales forecast beyond those of the most-optimistic analysts. The S&P 500 Index rose 0.9%, while the blue-chip Dow Jones Industrial Average slipped 0.1%.

Still, some on Wall Street warn of a lack of breadth in the rally as more stocks fell than climbed in both the S&P 500 and the Nasdaq 100 Indices on Thursday. The S&P 500 Equal Weight Index is down 1% for the year, while the main Index has now climbed 8.6% on the back of Big Tech.

The tech rally comes despite warnings from Fitch Ratings and DBRS Morningstar that the US’s AAA rating is under threat from the political stand-off over the debt ceiling. While House Speaker Kevin McCarthy voiced optimism that negotiators can reach a deal in time to avoid a default, the yield premium continued to rise on short-term US debt due next month, when the government is set to run out of cash if Congress doesn’t act. Still, Wall Street strategists expect a deal to get done.

Traders also sifted through a slew of hot economic data on Thursday morning. The US recorded fewer than expected initial jobless claims and fewer continuing claims as the labour market continues to perform well. At the same time, annualised quarter-over-quarter GDP grew more than expected, as did core personal consumption expenditures.

Sectors to watch

  • Nvidia Corp.’s forecast for surging revenue surprised even the most bullish analysts on Wall Street, propelling the chipmaker to the cusp of a $1 trillion market capitalisation and igniting a global jump in stocks linked to artificial intelligence
  • Insulet and Tandem Diabetes both fell after medical products competitor Medtronic agreed to buy wearable insulin patch maker EOFlow, a move that Piper Sandler said could accelerate the availability of the insulin patch in the US

Source: atomos

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