SYDNEY – Asian stocks made a slow start on Tuesday as a rally on Wall Street triggered an initial slide in U.S. stock futures, while the euro was near a one-month high as the ECB tightened its grip on the July rate hike.
After a firm close on Monday, Nasdaq futures lost 1.3% and traders blamed an earnings warning from Snap, which saw the owner of Snapchat lose 28%.
The S&P 500 futures also lost 0.6%, with some surrendering some of Monday’s 1.8% bounce.
Outside Japan, the broader MSCI index of Asia-Pacific shares has left almost flat, with Japan’s Nikkei down 0.1%.
The market is somewhat reassured by remarks by US President Joe Biden that he is considering easing sanctions on China and on Beijing’s ongoing commitment to stimulus.
Unfortunately, China’s zero-cue policy, including the attendant lockdown, has already caused considerable economic damage.
“Following the disappointing activity data for April, we have again lowered our forecast for China’s GDP (gross domestic product) and are now looking for a 2Q GDP contraction of 5.4% per annum, previously -1.5%,” JPMorgan analysts warned.
“Our 2Q global growth forecast stands at just 0.6% year-on-year, easily the weakest quarter since the global financial crisis beyond 2020.”
Preliminary surveys of European and US manufacturing purchasing managers for the month of May will be released later on Tuesday and may indicate a slight slowdown in what has become a resilient sector of the global economy.
Analysts are also slashing forecasts for the United States as the Federal Reserve raises interest rates by a full percentage point over the next two months.
The hackish message is likely to be driven home this week by a host of Fed speakers and minutes of Wednesday’s final policy meeting.
Yet the European Central Bank is also becoming more reckless, with President Christine Lagarde surprising many by opening the door to rate hikes in early July.
It saw the euro bounce 1.2% overnight in its best session since the beginning of March, at 0 1.0685. It is now facing tough chart resistance near $ 1.0756.
The dollar also retreated against a range of sterling and currencies, with the dollar index falling 0.9% overnight to 102.100.
The euro, meanwhile, jumped sharply to 136.56 Japanese yen, while the dollar remained stable at 127.77 yen.
Pullback gold in dollars helped bring some ground back to 1,853 an ounce.
Oil prices were caught amid concerns of a possible global recession and the possibility of higher fuel demand from the US summer driving season and plans to reopen Shanghai after a two-month coronavirus lockdown.
US crude was down 59 cents at $ 109.70, while Brent was down 60 cents at 2 112.82.
(Edited by Kenneth Maxwell)