Asia Retreats from Record High, US PCE Next in Focus
Asian stocks retreated from record levels after conflicting signals from the US and Iran dampened market confidence in a quick deal to end the war. The MSCI Asia-Pacific stock gauge fell 0.2%, snapping a five-day rally that had been fueled by a surge in technology stocks.
In energy markets, oil rebounded. Brent rose 2.2% to US$96.30 per barrel as the lack of a deal kept the Strait of Hormuz closed, disrupting oil and gas flows. This showed the market reintroducing a supply risk premium after inconsistent diplomatic narratives.
Worsening sentiment also boosted the dollar and pressured bonds. US Treasuries weakened, with the benchmark 10-year yield rising 2 bps to 4.50%, while Australian and New Zealand bonds also fell. This shift underscores the continuing energy-driven inflation concerns that are curbing interest in duration bonds, although the AI theme has continued to support global equities in recent sessions.
In the US, stock index futures pared gains following the latest US attack on Iran, while the White House dismissed Iranian media reports suggesting peace negotiations were moving forward. President Donald Trump said he was "not satisfied" with the negotiations, while insisting that no single country would control the Strait of Hormuz, a crucial sticking point in the talks as the conflict enters its fourth month. US Secretary of State Marco Rubio added that the market would see in the coming hours and days whether progress could be made.
Wall Street closed Wednesday's session relatively flat, with investors taking profits in technology stocks but maintaining optimism that an end to the war in the Middle East could be nearing. On the strategy front, several major companies remained bullish: Goldman Sachs raised its year-end target for the S&P 500 to 8,000 from 7,600, calling the first-quarter earnings season very strong; Morgan Stanley and Deutsche Bank also projected 8,000.
The technology scene remained busy, with mixed results. Salesforce provided guidance that was considered tepid, HP delivered a profit outlook that failed to alleviate chip cost concerns, while Snowflake surged nearly 30% in after-hours trading thanks to a stronger annual outlook. Marvell also released quarterly forecasts that beat estimates.
Market focus now turns to Thursday's release of the April PCE, the Fed's favorite inflation indicator, after the March PCE recorded 3.5% YoY and expectations pointed to 3.8% in April. Fed officials have given mixed signals: Philip Jefferson expects inflation to cool in the second half of the year, but assesses risks remain tilted to the upside; Lisa Cook even said inflation is moving in the wrong direction and is ready to support an interest rate hike if that trend continues.
At the Asian open, regional indicators moved cautiously: S&P 500 futures were nearly flat, Hang Seng futures were stable, Japan's Topix fell 0.3%, Australia's ASX 200 fell 0.8%, and Euro Stoxx 50 futures fell 0.4%. With the combination of geopolitics, energy, and inflation still "active," the market has the potential to remain headline-driven until there is clarity on Hormuz and the direction of the PCE data. (ayu)
Source: Newsmaker.id
