Key Finance News for Today**
*US stock futures steady, possible extension of market rally beyond technology sector*
US stock futures were little changed on Wednesday, indicating a pause in the market after a rotation into financial shares on Tuesday suggested a broader rally beyond the technology sector. Despite a decline in Apple Inc., the benchmark S&P 500 still managed to rise 0.2%. The KBW Regional Bank index surged over 5%, and the Russell 2000 climbed 2.7%.
In currency markets, a gauge of greenback strength edged lower by 0.1%, while the Japanese yen appreciated. The Turkish lira, however, dropped over 2% to a record low.
Government bond yields in Australia and New Zealand were higher at the short end of the curve, while Treasury yields in the US remained steady across tenors following a Treasury bill auction announcement that had weighed on short-dated US bonds on Tuesday.
*Asian equities hold steady this morning, positive sentiment in Hong Kong stocks*
In the Asian session, a gauge of Asian equities maintained a small gain, with Hong Kong stocks leading the rally on hopes for stimulus measures in China. The Hang Seng Index advanced more than 1%, while the city's technology measure surged by about twice that. Japanese stocks, on the other hand, erased gains amid selling in the electric appliances sector and positioning ahead of an equity futures contract expiry.
*Chinese trade figures and Australian GDP growth data in focus*
Chinese trade figures for May are in the spotlight, with investors eager to assess whether the previous month's slump in imports continues, offering insights into domestic demand in China. The surprise decline in imports in April raised concerns about the pace of economic reopening. Economists polled by Reuters expect an 8.0% fall in imports for May and a 0.4% decline in exports.
Additionally, Australia's first-quarter GDP growth figures are due, which could impact the Australian dollar and local assets. The surprise interest rate hike by the Reserve Bank of Australia (RBA) on Tuesday already led to a strong rally in the Australian dollar. The GDP growth figures will provide further insights into the country's economic performance and the effectiveness of the RBA's policies.
*SEC sues Coinbase and Binance, intensifying scrutiny on crypto exchanges*
The top US securities regulator, the Securities and Exchange Commission (SEC), filed a lawsuit against cryptocurrency platform Coinbase on Tuesday, escalating the crackdown on the crypto industry. In its complaint filed in Manhattan federal court, the SEC alleges that Coinbase has been operating as a middleman on crypto transactions since at least 2019, making billions of dollars while evading disclosure requirements meant to protect investors. The SEC claims that Coinbase traded at least 13 crypto assets that are securities and should have been registered. This case could have significant implications for Coinbase and the broader crypto market.
The SEC's action against Coinbase follows its recent lawsuit against Binance, the world's largest cryptocurrency exchange. The SEC accuses Binance and its CEO Changpeng Zhao of operating a "web of deception." These lawsuits reflect the increasing scrutiny and regulatory challenges faced by major crypto exchanges.
*US Recession concerns and market outlook*
Apollo Global Management Inc. CEO Marc Rowan believes the US could experience a "non-recession recession" as financial markets undergo adjustments while the underlying economy remains strong. Rowan notes that fixed income and equities markets have already adjusted to rising interest rates, while other areas, including real assets, have yet to fully price in these effects. He suggests that the correction and growth have further to go, given the previous decade of abnormality and excesses in financial markets.
*Commodities and global economy*
Commodity markets saw gold trading relatively unchanged, while oil prices fell after Saudi Arabia's announcement of a supply cut. Wheat prices surged as Ukraine reported that Russian forces blew up a giant dam in the country's south.
The World Bank warned in a report on Tuesday that the global economy is in a precarious situation due to sharp interest rate hikes impacting economic activity and causing vulnerabilities in lower-income countries. These concerns have suppressed equity markets.
Traders increasingly expect the Federal Reserve to maintain steady rates at its June meeting, while keeping the option for future hikes open, as the rate of US inflation remains high. Former vice-chair Richard H. Clarida also stated on Tuesday that it was unlikely the US central bank would start cutting rates until 2024.
1. China Forex Reserves and Trade Data (Wednesday): China's foreign exchange reserves and trade figures provide insights into the country's economic performance and its impact on global trade. These data points can be crucial for understanding China's economic health and its trade relationships.
2. US Trade and Consumer Credit Data (Wednesday): The US trade data reveals the balance of imports and exports, which can impact the overall economic growth and market sentiment. Additionally, consumer credit data gives an indication of consumer borrowing and spending patterns, providing insights into the strength of consumer demand.
3. Canada Rate Decision (Wednesday): The Bank of Canada's interest rate decision is a significant event for the Canadian economy. Changes in interest rates can impact borrowing costs, investment decisions, and currency values. Investors and businesses closely monitor rate decisions for potential implications on financial markets.
4. EIA Crude Oil Inventory Data (Wednesday): The Energy Information Administration (EIA) releases weekly crude oil inventory data, which provides an update on the levels of crude oil and petroleum product stockpiles in the United States. This information can influence oil prices and has implications for the energy sector and related industries.
5. Eurozone GDP Data (Thursday): Eurozone GDP figures offer an overview of the economic performance of the entire Eurozone region. This data is closely watched as it provides insights into the health of the European economy and can impact the value of the Euro currency.