U.S. equities climbed on Monday, life by technology shares after Elon Musk took a 9.2% stake in Twitter Inc, sending shares +26.22% higher.
The S&P500 climbed +0.81% in mixed breadth with only 49.5% of stocks rising and gains concentrated in technology +1.91%, consumer discretionary +2.33%, and communications +2.28% while most other sectors weakened modestly. The Nasdaq Composite climbed +1.90%, as did the Dow Jones +0.30% and Russell 2000 +0.21% with the VIX declining -5.40% to 18.57. Shares in Twitter surged after it was revealed Elon Musk had taken a 9.2% passive stake in the company with some analysts suggesting the stake could become active and use the stake to push for changes to Twitter’s content rules. Elsewhere, shares in Tesla Inc. climbed +4.87% following record deliveries reported over the weekend. Chinese listed shares rose with fears of potential delistings easing after Beijing regulators proposed revising confidentiality rules involving offshore listings over the weekend with the Nasdaq Golden Dragon China index rising +6.1%.
There was little in the way of economic data to guide markets with U.S. factory orders for February declining -by 0.5% in line with estimates from a revised higher +1.5% in January. Shorter-dated Treasury yields declined with the 2-year rate down -3.6 basis points to 2.42% while the 10 and 30-year rates rose +1.1 and +2.2 basis points respectively with multiple curve spreads remaining at or near inverted levels. The U.S. dollar index strengthened +0.35% to 98.98.
European equities gained on Monday despite the potential for further sanctions on Russia as Ukraine accused Russia of war crimes as talks resumed on Monday via video. The Euro Stoxx 600 climbed +0.84% lifted by consumer discretionary +2.22%, health care +1.35% and technology +1.88%. The DAX also gained +0.50%, as did the CAC +0.70% and FTSE100 +0.28% with major benchmarks across the region higher. Attention will increasingly be switched to earnings this month as companies begin to report Q1 profits which are expected to grow +3.47% to 8.35 from 8.07 from 8.34 at the end of 2021. 10-year government bond yields were lower across the region, ranging from -6.2 basis points in the U.K. to -1.9 in France, with the Euro weakened -0.64% to 1.0974 while the Pound was little changed at 1.3116.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
The ASX looks set to open higher this morning with ASX200 futures +50 points or +0.67% higher at 7,528. The index rose +0.27% on Monday boosted by materials +0.98% which offset weakness for financials -0.26% and consumer discretionary -0.86% with 66% of stocks higher. Materials stocks were boosted by higher commodity prices over the prospect of additional sanctions on Russia over its war in Ukraine, with Germany and the European Union discussing banning imports of Russian gas. The RBA is set to meet at 14:30 AEDT and while there are no changes expected, investors will be focused on changes to language and forward guidance for monetary policy following the election. Based on futures pricing, investors expect a total of 6-7 hikes in 2022 bringing the cash rate to +1.69% from +0.10% currently. The Australian dollar rose +0.63% on Monday to 0.7543 while the yield on 10-year government bonds was little changed at 2.832%
Oil prices rose as investors weighed the prospect of further sanctions on Russia against the expected release of strategic reserves from major consumers. Both WTI and Brent crude climbed +4.04% and +3.46% to US$103.28 and US$108 a barrel. Iron ore futures in Singapore climbed +1.49% on Monday although modestly weaker by -0.15% this morning at US$163.50. Gold lifted +0.37% to US$1,932 with silver -0.37% lower at US$24.54 and Bitcoin gained +0.48% to US$46,533.
Economic data:
- RBA Rate Decision 14:30
- Eurozone Services PMI (MoM Mar) 18:00
- U.K. Services PMI (MoM Mar) 18:30
- U.S. ISM Non-manufacturing PMI (MoM Mar) 00:00
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
