Ongoing Markets Commentary: Major US stock indices extend gains

written on March 30, 2022

The global economy is now entering a more mature phase of the economic cycle when growth momentum peaks and central banks begin to withdraw support.  Against this backdrop, equity returns are expected to be more muted but still positive, supported by solid corporate earnings.

All three major US stock indices extended gains on Tuesday, with both the S&P 500 and the Nasdaq climbing well over 1% after Ukraine and Russia claimed progress has been made in cease-fire talks in Turkey. Auto and travel stocks were the biggest gainers while energy and materials shares decline as commodities prices pulled back. Meanwhile European markets outperformed their US counterparts, with the Euro Stoxx 50 up 3%.  

Summary

  • Stocks in Asia mostly gained on Wednesday, with Hong Kong trading at a near 1-week high and markets in China climbing 1%, as investors tried to shake off worries over the Covid-19 situation and lockdown in Shanghai. The Nikkei sank over 1%, due to renewed fears about rising Omicron cases. 
  • European stocks look set to drop while US futures are set to follow suit. 
  • Oil futures were 1% higher this morning, erasing losses from the previous session, after an API report showed US crude stocks fell by 3 million barrels last week, tiple the decline expected by analysts. Meanwhile major oil producers are unlikely to boost output above their agreed 400,000 barrels per day ahead of an OPEC+ meeting on Thursday. 
  • The US said Ukraine’s capital Kyiv remains under threat even after Russia promised to scale back military operations there. Russia’s offer to “fundamentally cut back” its military operations in northern Ukraine sparked optimism around the potential for a peace deal Tuesday. Meanwhile, Moscow’s top diplomat arrived in China on his first visit to the country since the Kremlin’s was started. 
  • The US two-year yield briefly exceeded the 10-year Tuesday for the first time since 2019, inverting yet another segment of the Treasury curve and reinforcing the view that Federal Reserve rate increases may cause a recession. 
  • Micron Technology’s profit surged in Q2 with higher adoption of 5G, artificial intelligence and electric vehicles, driving demand higher. The company’s guidance for Q3 was also above consensus, driving the shares 4% higher in after-hours trading. 

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