US: Stocks extend gains as tech rebounds; bonds fall

US STOCKS gained on Monday (Jun 6) as Beijing’s latest move to ease Covid restrictions injected a note of optimism into markets rattled by inflation and rate-hike concerns. Treasuries and the dollar slipped.

Both the S&P 500 and tech-heavy Nasdaq 100 rose more than 1 per cent amid gains in megacaps, including Apple Inc and Microsoft Corp. Amazon.com Inc advanced after implementing a 20-for-1 stock split. Twitter Inc fell after Elon Musk said he believes the company is breaching their merger agreement by not providing information about spam and fake accounts he demanded.

Chinese regulators are set to ease curbs on ride-hailing giant Didi Global Inc. and other US-listed tech firms, sending Didi’s shares up more than 50 per cent. 

Data last week showing stronger-than-forecast US hiring for May suggested the Federal Reserve won’t waver from its tightening path to rein in price pressures. But Goldman Sachs Group Inc economists said the Fed may be able to pull off its aggressive rate-hike plan without tipping the country into recession. The easing of Chinese lockdowns will help abate supply-chain pressures, said Diana Mousina, a senior economist at AMP Capital.

“Positive news around Chinese economic activity and cheaper equity valuations could offer value from a long-term investment perspective, but volatility will remain high in the short-term,” she said in a note. 

Crude oil held around US$119 a barrel in New York after Saudi Arabia signalled confidence in demand with a larger-than-expected price increase in Asia. Meanwhile, the US was said to be considering allowing more sanctioned Iranian oil onto global markets to counter the decline in Russian supplies.

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The US jobs report last Friday quelled some concern that the world’s biggest economy is slowing too sharply, but also strengthened the view that the Fed will keep hiking rates to combat inflation. Investors bought equities last week, with US stocks seeing a fourth straight week of inflows as a bear market rally continues, according to Bank of America strategists, citing EPFR Global data. BLOOMBERG