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Indian Morning Briefing : Asian Markets Retreat After Wall Street Decline


GLOBAL MARKETS 
DJIA            31490.07  -1164.52    -3.57% 
Nasdaq          11418.15   -566.37    -4.73% 
S&P 500          3923.68   -165.17    -4.04% 
FTSE 100         7438.09    -80.26    -1.07% 
Nikkei Stock    26214.07   -697.13    -2.59% 
Hang Seng       19981.43   -662.85    -3.21% 
Kospi            2584.86    -41.12    -1.57% 
SGX Nifty*      15914.00    -321.5    -1.98% 
*May contract 
 
USD/JPY      128.65-66    +0.33% 
Range        128.72   127.90 
EUR/USD      1.0494-97    +0.30% 
Range        1.0502   1.0460 
 
CBOT Wheat July $12.306 per bushel 
Spot Gold $1,815.68/oz -0.01% 
Nymex Crude (NY) $109.22  -$3.18 
 
 
US STOCKS 

U.S. stocks fell sharply, with the Dow industrials suffering their worst day since 2020, as the latest set of disappointing earnings from large retailers raised investors’ fears of a recession.

The Dow Jones Industrial Average was down about 3.6% — its worst percentage decline since June 11, 2020 and its lowest closing level since March 2021. The S&P 500 dropped 4% and the tech-focused Nasdaq Composite Index slid 4.7%.

Major retailers said their profits were hurt by rising costs, sluggish sales and supply-chain disruptions. Shares of Target sank 25% after the company posted quarterly earnings that missed analysts’ expectations.

“Inflation is hitting every aspect of an earnings report, whether it be the transportation side or supply-chain disruption,” said Nick Giacoumakis, president and founder of NEIRG Wealth Management. “Customers are no longer buying the more expensive items they would typically buy. All this trickles through to an earnings report.”

 
 
ASIAN STOCKS 

Japanese stocks were broadly lower in morning trade as concerns persisted about higher costs of operations and after U.S. stocks fell sharply overnight. Electronics and tech stocks were leading the declines. Investors were paying attention to the movements of the yen, crude oil and any updates on the Covid-19 lockdowns in China. USD/JPY was at 128.20, down steeply from 129.13 as of Wednesday’s Tokyo stock-market close. The Nikkei Stock Average was down 2.4% at 26264.94.

South Korea’s Kospi fell 1.9% to 2576.72 in early trade, as large-cap technology stocks, shipbuilders and retailers retreated. Wall Street’s declines overnight were fanning concerns about inflation, which can suppress consumer spending and broader economic activity. Foreign and institutional investors were net sellers of local equities amid receding risk appetite. Renewed risk-off sentiment sent USD/KRW 0.7% higher to 1,276.00.

Hong Kong’s Hang Seng Index slid 3.1% to 20005.17, following the U.S. equity-market selloff. Chinese technology companies on the U.S. ADR market fell sharply overnight, and they are likely to face profit-taking pressure in the Hong Kong market today, KGI Research said in morning commentary. Losses on the HSI were broad-based. The Hang Seng TECH Index was down 4.5% at 4068.77.

Chinese stocks were lower in early trade. Markets in the region will likely be weighed by the decline in U.S. stocks overnight on disappointing retail earnings and concerns of an economic downturn, Phillip Securities analysts said in a note. “An uptick in Covid-19 cases in China seems to dampen earlier hopes of a quick easing in virus restrictions, potentially contributing to the market risk aversion,” IG market analyst Yeap Jun Rong said in a note. Bank stocks were lower. The Shanghai Composite Index was down 1.1% at 3051.67, the Shenzhen Composite Index was 1.1% lower at 1919.68 and the ChiNext Price Index declined 1.1% to 2338.71.

 
FOREX 

Most G-10 and Asian currencies strengthened against the U.S. dollar in a possible technical rebound after their recent weakness, but further gains may be capped. Stagflation fears are likely to dominate and keep the USD Index well-supported today, MUFG Bank currency analyst Sophia Ng said in a research note. Asia ex-Japan currencies are expected to stay under pressure, the analyst added. The ICE USD Index was down 0.1% at 103.73. AUD/USD rose 0.2% to 0.6969 and EUR/USD gained 0.2% to 1.0486, while USD/SGD edged 0.1% lower to 1.3888.

 
METALS 

Gold was trading steadily in the early-morning Asian session, underpinned by safe-haven demand. Prices of the precious metal didn’t break after the carnage on Wall Street, which suggests some investors are fleeing to gold for safety, said Oanda’s senior market analyst Edward Moya in an email. If gold can distance itself from the $1,800/oz level, technical buying could help send prices to $1,850/oz, the analyst added. Spot gold was down 0.01% at $1,815.68/oz.

 
OIL SUMMARY 

Oil rose, reversing earlier losses, in a likely technical rebound from the recent selloff. It is a very volatile market, but there are enough reasons to suggest why traders are seeking to sell in the current environment, SPI Asset Management managing partner Stephen Innes said, pointing to the possibility of Venezuela’s oil coming to the market. Front-month WTI crude oil futures were 0.6% higher at $110.21/bbl; front-month Brent crude oil futures were 1.1% higher at $110.27/bbl.

 
 
TOP HEADLINES 
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Elon Musk's Pursuit of Twitter Leads to Legal Questions 
Under Armour CEO Patrik Frisk Is Stepping Down 
Prenetics Shares Tumble in Nasdaq Trading Debut 
Cisco Stock Plunges 13% as China Lockdown Affects Supply and Outlook 
Convicted Insurance Mogul Ordered to Give Up Control of Companies 
Target, Walmart Earnings Selloff Puts Retailers' Inflation Pains on Display 
Google Moves Employees Out of Russia 
Tencent Posts Steepest Profit Decline Since Going Public 
 
 

(END) Dow Jones Newswires

05-18-22 2315ET



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