Market Summary

ASX futures had ticked up by 6 points, or 0.1%, as of 6:00am on Tuesday, suggesting a higher open.

North America

US stocks traded mixed in a tight range and bond yields rose Monday. Traders awaited news from the debt ceiling negotiations and chewed over the latest remarks from Federal Reserve officials, including from one who said he favored additional interest rate increases.

The tech-heavy Nasdaq Composite rose 0.5% to a new 2023 high, while the S&P 500 was little changed. The indices are now up 22% and 9.2% on the year, respectively. The Dow Jones Industrial Average shed 0.4%, or about 140 points, to leave it up just 0.4% this year.

President Biden and House Speaker Kevin McCarthy were due to meet Monday evening in pursuit of a deal to raise the government's debt ceiling by June 1, when Treasury Secretary Janet Yellen has said the US could run out of money to pay all its bills.

Trading that has pushed stocks to their highest level in months since last summer suggests investors are beginning to look past a potential default and toward future interest rate decisions and the likelihood of a recession.

Regional banks continued to rebound after PacWest said it sold a bundle of real estate loans for $2.6 billion. Shares of the Los Angeles bank jumped 20%. Several lenders gained at least 3%, including KeyCorp, Regions and Comerica. Zions Bancorp's hard-hit stock gained 4.9%.

Shares of Facebook owner Meta Platforms continued to bounce back from last year's swoon, rising 1.1% after being fined $1.3 billion by European Union regulators for sending user information to the US. The stock has more than doubled so far in 2023.

Chevron said it would acquire smaller energy producer PDC Energy in an all-stock deal worth $6.3 billion, boosting the oil major's position in Colorado's Denver-Julesburg Basin and the Permian Basin in West Texas. Chevron's shares fell 1.8% following the announcement.

Micron Technology declined 2.8% after China said it is banning major firms from buying products from the semiconductor maker.

Fed officials made public remarks Monday that added to the mixed messages from policy makers during the rate-hike cycle that began last March. St. Louis Fed President James Bullard said he favors two more 0.25% rate increases, while San Francisco Fed President Mary Daly emphasized data dependency and policy flexibility.

Commodities and Currency

Brent crude oil gained 0.5% to US$75.95 a barrel while gold dipped 0.3% to US$1,972.90.

Australian government bonds were slightly lower, with the 2 Year yield declining to 3.47% and the 10 Year yield unchanged at 3.59%. US Treasury notes moved higher, with the 2 Year yield increasing to 4.31% and the 10 Year yield rising to 3.72%.

The Australian dollar moved up to 66.52 US cents from its previous close of 66.47. The Wall Street Journal Dollar Index inched higher to 97.13.

Asia

Chinese shares closed higher thanks to a stronger yuan and a softer stance by the US at the G-7 meeting. The Shanghai Composite Index closed 0.4% higher at 3296.47. Gains were led by consumption stocks like Proya Cosmetics (+5.4%) and BYD Co. (+2.3%). Software makers and the media sector fell, with Beijing Kingsoft Office Software down 4.1%.

Hong Kong’s Hang Seng Index rose 1.2% to 19678.17, boosted by a stronger yuan and softened US-China tensions. Tech stocks led gains: Baidu (+3.3%), Meituan (+3.1%), and BYD (+3.4%). Some developers declined, including Seazen Group (-1.4%).

Japan’s Nikkei Stock Average rose 0.9% to 31086.82, its highest close since July 1990. Optimism over US debt talks and China's economy lifted stocks like Tokio Marine (+5.7%), Otsuka Holdings (+3.4%), and Mitsubishi Heavy Industries (+3.2%).

India’s Sensex rose 0.4% to 61963.68, led by Adani Group stocks following a Supreme Court report finding no share-price manipulation. Adani Wilmar surged 10.0%, Adani Ports 6.0%. Axis Bank (-0.8%) and Tata Motor (-0.5%) were among the laggards.

Europe

European markets were mixed. The Stoxx Europe 600 was flat, the CAC 40 fell 0.2%, and the DAX dropped 0.3%.

In London, the FTSE 100 rose 0.2% on hopes for improved US-China relations. Standard Chartered and Burberry rose. JD Sports and ConvaTec were top gainers. Ryanair’s annual profit and travel demand rebound boosted sentiment for British Airways owner IAG and Rolls-Royce Holdings.