Moving markets today: Asia markets mixed, mirroring Wall Street’s lead; oil prices dip, Reddit shares skyrocket by 16 per cent, TikTok mounts legal challenge against potential US ban on popular app; All eyes turn to BOE policy decision and UK GDP Data
US equities experienced a broad rally, pushing the S&P 500 to its highest level in three weeks and marking its first four-session winning streak since March. Mega cap stocks like Alphabet and Meta Platforms contributed to this surge, with gains of 1.9 per cent and 0.6 per cent respectively. However, Asia-Pacific markets showed mixed results, mirroring Tuesday’s movements on Wall Street. Oil prices dipped slightly due to increased US stockpiles, while gold prices remained stable as traders awaited signals from the US Federal Reserve. Reddit saw a remarkable 16 per cent jump after surpassing Wall Street estimates in its first quarter post-IPO. In other news, TikTok and ByteDance filed a lawsuit seeking to block a US law aiming to force the sale or ban of the app. Bank of Japan Governor Ueda hinted at potential monetary policy adjustments if yen movements begin to affect inflation. Investors are eagerly awaiting the Bank of England’s policy decision and guidance, as well as the Q1 GDP report later in the week. While the BOE is expected to maintain rates at 5.25 per cent, there’s anticipation for a possible GDP rebound from the previous quarter. Here are five key takeaways for your day.
Reddit shares surge 16 per cent after exceeding Wall Street forecasts in first post-IPO quarter
Reddit’s quarterly earnings, its first since going public in March, surpassed analysts’ expectations, causing a 16 per cent surge in shares during after-hours trading. The social media platform estimated revenue between $240 million and $255 million for the second quarter of 2024, exceeding consensus forecasts.
In the second quarter, Reddit’s revenue soared by 48 per cent to $243 million, well above the anticipated $213 million, as per data from S&P Capital IQ. However, the company recorded net losses of $575.1 million, wider than the expected $610 million and a significant increase from $60.9 million in the same quarter the previous year. Reddit attributed this increase to “IPO expenses” but managed to post its first quarterly profit on an adjusted basis of $10 million, the FT reported.
TikTok, ByteDance file lawsuit to halt US law pushing for app sale or ban
TikTok and its parent company, ByteDance, took legal action in a US federal court to oppose a law signed by President Joe Biden. This law mandates either the sale of TikTok, a popular short video app used by 170 million Americans, or its prohibition.
The lawsuit was filed in the US Court of Appeals for the District of Columbia Circuit, arguing that the law violates various aspects of the US Constitution, notably the protection of free speech under the First Amendment. Biden signed this law on April 24, giving ByteDance until January 19 to sell TikTok or face a ban.
BOJ’s Ueda warns of potential monetary policy response to yen’s inflationary impact
Bank of Japan Governor Kazuo Ueda warned that if significant fluctuations in the yen begin to significantly affect inflation, the central bank may consider implementing monetary policy measures. He reiterated his worries about the economic consequences of the currency’s recent sharp declines. Ueda stressed that while the BOJ doesn’t plan to directly control yen fluctuations through monetary policy, it will carefully assess their potential significant impact on the economy and prices.
What’s coming up
Investors will keep a keen eye on updates from the Bank of England, including the release of UK GDP growth figures and preliminary consumer sentiment data from the University of Michigan in the US. Additionally, insights into the Canadian job market will be of interest. The Bank of England’s decision on the Bank Rate, which is expected to remain unchanged at its upcoming meeting, will be closely watched for any indications regarding monetary policy.
US consumer price data, scheduled for release in a week’s time, will also be closely monitored.
This week, media companies, including heavyweights like Fox, Warner Bros Discovery, and UK-based ITV, will be in focus as they are set to report their earnings.
Asia markets mixed following Wall Street’s lead
US stock markets saw mixed results as the S&P 500 nudged up by 0.13 per cent, reaching 5,187.70 points, driven by gains in most sectors except for consumer cyclicals. On the flip side, the Nasdaq Composite slipped by 0.10 per cent to settle at 16,332.56, while the Dow Jones Industrial Average saw a slight uptick of 0.08 per cent, closing at 38,884.26. The Russell 2000, focusing on small-cap stocks, posted a modest gain of 0.2 per cent.
Tech giants Alphabet and Meta Platforms saw their stocks rise by 1.9 per cent and 0.6 per cent respectively, which contributed to the overall market upswing. However, Nvidia experienced a setback with a 1.7 per cent decline following reports of Apple’s potential entry into the AI chip market for data centres.
Apple unveiled its new chip, the M4, resulting in a 0.4 per cent stock increase, despite it being introduced in an iPad Pro model rather than a laptop. Tesla faced a 3.8 per cent drop after data indicated a decrease in sales of China-made electric vehicles compared to the previous year.
Bond yields saw fluctuations, with the 10-year Treasury bond yield decreasing slightly to 4.46 per cent and the two-year bond yield edging up to 4.83 per cent. The yen depreciated by 0.3 per cent against the dollar.
In Asia, market movements were varied, with Japan’s Nikkei 225 falling by 0.96 per cent and Hong Kong’s Hang Seng index seeing a 0.33 per cent increase. Mainland China’s CSI 300 index declined by 0.4 per cent, while Australia’s S&P/ASX 200 edged up by 0.1 per cent.
Oil prices dipped due to rising US stockpiles and hopes for a ceasefire in Gaza, with Brent crude oil futures falling to $82.76 a barrel and US West Texas Intermediate crude futures dropping to $78.02 a barrel. Gold prices remained stable at around $2,316.53 per ounce, showing a slight increase of 0.13 per cent.
