On Monday, Asia-Pacific stock markets echoed the upward trajectory of Wall Street, buoyed by a U.S. jobs report that fell short of expectations, signaling rate cut hopes. Australia’s S&P/ASX 200 index witnessed a 0.7% uplift, settling at 7,682.4 and marking its third consecutive session of advances. In a similar vein, Hong Kong’s Hang Seng index experienced a modest rise of 0.47%, while mainland China’s CSI 300 surged 1.48% to conclude at 3,657.88, as traders resumed activity after the Labor Day holiday. The collective gains across these key indices reflect a cautiously optimistic sentiment permeating the region’s markets.

European markets experienced a positive start to the week, with key indices climbing. The French CAC 40 edged up by 0.5%, while the German DAX notched a gain of 0.6%. The Italian FTSE MIB outperformed its peers with a rise of 0.9%. Meanwhile, the U.K.’s FTSE 100 was absent from the day’s trading due to a public holiday, leading to expectations of thinner trading volumes across European markets.

U.S. stock futures signaled a buoyant mood on Wall Street on Monday, as market participants geared up to extend the robust gains witnessed in the previous session. The upbeat sentiment was further bolstered by the financial update from Warren Buffett’s Berkshire Hathaway, which unveiled a remarkable nearly 40% increase in its operating earnings for the first quarter compared to the same period last year. This financial feat coincided with Berkshire’s much-anticipated annual shareholder meeting held on Saturday.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell include AMG, BCRX, BNTX, FRPT, JLL, NSSC, NWN, PRFT, SAVE, SHO, & THUS. After the bell includes ADTN, AL, AXON, BRBR, BYON CBT, COHR, COTY, FN, FIS, FMC, GBDC, GT, HIMS, IFF, JJSF, LCID, LITE, VAC, MTTR, MCHP, NIHI, ME, OGS, OTTR, PLTR, PLYA, PRI, PRA, PRI, PRA, O, RRX, RKX, RKLB, SAFE, SWAV, SPG, TALO, TDC, TBI, VRNS, VRTX, VMEO, VNO, & WMB.

News & Technicals’

In the city of Rafah, a humanitarian crisis looms large as over 1.2 million individuals have sought refuge, fleeing from various regions of the Gaza Strip. The majority find themselves in makeshift tented communities, grappling with a dire scarcity of essential resources such as clean water, adequate food supplies, and fundamental medical provisions. Amidst this escalating situation, the White House, alongside prominent international entities including the United Nations and the World Health Organization, has implored Israel to refrain from launching an offensive in the area. They caution that such actions could precipitate disastrous humanitarian repercussions, further exacerbating the plight of the already vulnerable population seeking shelter in Rafah.

The landscape of energy consumption is undergoing a transformative shift, with natural gas producers expressing optimism about the burgeoning demand. This confidence is largely attributed to the colossal energy requirements of burgeoning technologies such as artificial intelligence and the proliferation of data centers. A projection by Wells Fargo anticipates a 20% surge in electricity demand by the year 2030, underscoring the escalating need for power soon. Power companies are advocating for natural gas as an indispensable component of the energy mix, emphasizing its critical role in maintaining a steady supply of electricity, especially during periods when renewable sources fall short of generating sufficient power. This stance highlights the intricate balance between fostering sustainable energy practices and ensuring the reliability of power systems in an increasingly digital world.

Ant Group is poised to make a significant leap in the global payments landscape with its Alipay+ service, targeting expansion across Europe, the Middle East, and Latin America. Douglas Feagin, the senior vice president of Ant Group, shared insights with CNBC on consumer behavior, noting a preference for travelers to utilize their familiar domestic e-wallets while abroad, rather than transitioning to unfamiliar apps. Launched in 2020, Alipay+ has facilitated this preference by enabling international visitors to make payments in China—and potentially in other nations—using their native payment apps through the simple act of scanning Alipay’s QR codes. This strategic move by Ant Group caters to the convenience and comfort of users, fostering a seamless cross-border transaction experience that aligns with the modern, mobile-centric lifestyle.

U.S. Treasury yields experienced a downtrend on Monday, continuing the downward momentum from Friday’s session following the release of the April jobs report, which revealed payroll growth that didn’t meet expectations. The 10-year Treasury yield decreased by 2 basis points, landing at 4.475%. Concurrently, the 2-year Treasury yield also saw a marginal decline of 1 basis point, settling at 4.789%. It’s important to note that in the bond market, yields and bond prices have an inverse relationship. To put it into perspective, a single basis point is equivalent to 0.01%. This shift in yields reflects the market’s reaction to economic indicators and influences investment strategies across the board.

With a very light week of economic data, earnings and rate cut hopes will drive the market sentiment so continue to expect considerable volatility.  Morning gaps will likely continue to produce whipsaws so plan your risk carefully.

Trade Wisely,

Doug