US & EUROPE EQUITY UNDER PRESSURE WHILE ASIAN STOCKS GAIN
US Futures contracts tied to the three major indices declined nearly 0.5% each, as investors looked ahead to tighter monetary policy from the Fed while watching developments in the Russia-Ukraine war. Markets were recalibrating the higher possibility of a 50-bps hike in May following hawkish comments from several policymakers this week. Fed Chair Powell, during a speech before the National Association for Business Economics, opened the door for a more aggressive move to tame inflation, which is now running at 40 years highs. In regular trading on Tuesday, the Dow rose 0.7% while the S&P 500 climbed 1.1%. The Nasdaq Composite was the relative outperformer, rallying 2% as big tech names pushed the index higher.
Most European stock indices gave up early gains to slip below the flatline on Wednesday. Both Germany’s DAX and the Stoxx 600 eased roughly 0.3% from their respective four and five-week highs. Real-estate and banking shares weighed down, while commodity-linked stocks banked on supply concerns. On the data front, the UK’s headline inflation rate rose to a three-decade high of 6.2% in February, above market expectations of 5.9%.
The Nikkei 225 Index jumped 3% to 28,040 while the broader Topix Index gained 2.3% to 1,979 on Wednesday, with both equity benchmarks closing at their highest level in two months. Technology stocks led the market higher, with strong gains from Lasertec (10.2%), SoftBank Group (7.2%), Tokyo Electron (3.8%), Keyence (4.6%) and Mitsui High Tec (9.5%). All other sectors in Japan participated in the rally, with strong performances from index heavyweights including Toyota Motor (4%), Sony Group (2.2%), Fast Retailing (5.2%), Hitachi (4.2%), Shin-Etsu Chemical (3.3%) and Nidec Corp (4.2%), among others.
The BSE Sensex ended 304.48 points or 0.53% lower to close at 57,684.82 on Wednesday, tracking a fresh surge in crude oil prices .Drags were led by banking, financials and auto with 17 out of 30 stocks ending in the red. Among the individual stocks, top draggers included Housing Development Finance Corporation (-2.36%), Kotak Bank (-2.25%), Bharti Airtel (-1.97%), Sun Pharmaceuticals (-1.65%), Maruti (-1.54%) and Mahindra and Mahindra (-1.33%). On the other hand, commodity led stocks gained on back of higher oil prices, with positive contributions coming particularly from Tata Steel (+2.15%), PowerGrid (+0.65%), National Thermal Power Corporation (+0.455) and Reliance (+0.34%).
The Shanghai Composite edged up 0.34% to close at 3,271 while the Shenzhen Component gained 0.73% to 12,409 on Wednesday, with both indexes holding a recent advance as investors continued to assess the feasibility of Beijing’s pledge to stabilize markets. In the latest developments, China’s State Council pledged tax rebates to businesses to shore up economic stability and called for targeted measures to boost confidence in capital markets. Meanwhile, economists have pushed back their expectations of another cut in China’s reserve requirement ratio to the second quarter, with the government so far stopping short of giving a clear signal of a near-term policy move. Healthcare and consumer staple stocks led the advance, with notable gains from Nantong Jinghua (6%), Guangdong Zhongshe (6.2%), Andon Health (3.9%), Wuxi Apptec (7.3%), Kweichow Moutai (3.4%) and Wuliangye Yibin (1%), among others.
