Morning report

China Opens Up, Commodities Rebound 

Asian markets rose on Monday following Friday's strong gains in the US. European indices were mixed, with the region overall finishing in the green as commodity prices rebounded. Wall Street took a breather from last week's rally.

US benchmarks were flat or down, while energy shares gained from rising oil prices

US equities were choppy to start the week with benchmarks zigzagging between gains and losses as last week’s rally amid easing inflation concerns lost momentum. Data on Monday showed US manufacturing remained relatively strong in May; durable goods orders gained +0.7% m-o-m and goods shipments were up +1.3%. May Pending Home Sales were up +0.7%. US 2-year and 10-year Treasury bond yields both recovered +8bp to 3.13% and 3.20%, respectively. The Dow Jones and S&P 500 were both little changed (-0.1%) at mid-afternoon, while the Nasdaqhad lost -0.5%. The energy sector (+2.6%) got a lift from oil prices, and utilities (+0.6%) and healthcare (+0.5%) were also in the green, while consumer discretionary and materials (both -0.8%) led the remaining sectors in losses. Spirit Airlines (-8.2%) said it would accept Frontier Group's (-11.5%) latest takeover bid of US$23.7b. ​​​​​​​Robinhood Markets bounced +4.6% after a broker upgraded the stock to NEUTRAL, while also cutting the rating of Coinbase(-9.7%) to SELL.

European markets very mixed

The Stoxx 600 rose +0.5% as individual market performances varied widely — between -0.9% in Italy and +3.2% in Sweden. Prosus soared +15.7% after saying it would decrease its 28.9% stake in Chinese software giant Tencent(-1.6%) and buy back stock. A broker upgraded auto parts maker Faurecia(+3.9%) to BUY. Siemens (+1.3%) announced a deal to buy Brightly Software for US$1.6b. Drugmaker Ipsen will buy Epizymefor US$247m. London’s FTSE 100 (+0.7%) was lifted by miners like Anglo American (+2.2%) and Rio Tinto (+1.5%) after G7 leaders pledged to raise US$600b over five years to finance infrastructure in developing countries. BAE Systems (+2.0%) received a US$12b contract from the US Department of Defence to support intercontinental ballistic missile systems in Utah. CareTechup +21.1%, agreed to be taken over for £870b by a consortium, led by Sheikh Holdings. InterContinental franchiser IHG (+1.1%) announced plans to cease operations in Russia, where it has agreements with 28 hotels. 

Asian equities were in the green with gains coming from both from Wall Street’s rally and news of easing COVID restrictions

China’s CSI was up +1.1% and the Shanghai Composite gained +0.9%, while Hong Kong’s Hang Seng bounced +2.4%. China eased some COVID restrictions but an official raised the prospect of continued vigilance for years to come. South Korea’s Kospi progressed +1.5% and Japan’s Nikkei 225 gained +1.4%. The ASX 200 rose +1.9%, with equities seeing gains across the board following Friday's strong rebound on Wall Street. Financials (+2.6%) performed best, while utilities (+1.3%) and consumer staples (+1.3%) gained the least. Link Administration bounced +4.1%, despite reports that Canadian legaltech company Dye & Durham (-2.3%) cut its takeover proposal by almost 22%. Metcash also rose +4.1% after reporting an increase in FY22 profit. Evolution Mining (-21.9%)downgraded its FY23 production guidance and OZ Minerals (-3.8%) cut its copper production forecasts. The NZX 50 gained +1.7%.

Commodities were mixed; oil gained, precious metals and iron ore changed little, industrial metals rose​​​​​​​

WTI crude gained +2.1% to US$109.92/bbl, gold lost -0.3% to US$1,824.10/oz and iron ore was flat at US$129.71/MT.

 


 

If you want to monitor price movements and follow key global indices, commodities and currencies on the go, the Forsyth Barr Investment Insights App is available for Apple and Android devices.

This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your financial adviser.