Asia stocks restrained as U.S. futures retreat

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SYDNEY, May 24: Asian shares got off to a sluggish start on Tuesday (May 24) after a rally on Wall Street was soured by an early slide in U.S. stock futures.

After ending Monday firmer, Nasdaq futures NQc1 lost 1.3% with traders blaming an earnings warning from Snap SNAP.N which saw shares in the Snapchat owner tumble 28%.

S&P 500 futures ESc1 also lost 0.6%, surrendering some of Monday’s 1.8% bounce.

Meanwhile, markets have taken some comfort from U.S. President Joe Biden’s comment that he was considering easing sanctions on China, and from Beijing’s ongoing promises of stimulus.

Unfortunately, China’s zero-COVID policy, with attendant lockdowns, has already done considerable economic damage.

Early surveys of European and U.S. manufacturing purchasing managers for May are due out later on Tuesday (May 24) and could show some slowing in what has been a resilient sector of the global economy.

Analysts have also been trimming forecasts for the United States given the Federal Reserve seems certain to hike interest rates by a full percentage point over the next two months.

The euro up at $1.0685 EUR, having bounced 1.2% overnight in its best session since early March. However, it now faces stiff chart resistance around $1.0756.

The dollar also retreated versus sterling and a range of currencies, taking the dollar index down 0.9% overnight and back to 102.100 USD. Whereas the euro jumped sharply to 136.56 Japanese yen EURJPY, while the dollar held steady at 127.77 yen JPY.

The pullback in the dollar helped gold regain some ground to $1,853 an ounce XAU.

Oil prices were caught between worries over a possible global downturn and the prospect of higher fuel demand from the U.S. summer driving season and Shanghai’s plans to reopen after a two-month COVID-19 lockdown. – TVS

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