ADDX GO Market Morning Wrap - 22nd May

Stock Market

Following the release of the U.S. Treasury Department's 20-year Treasury bond auction data in the early hours today, U.S. stocks collectively plunged amid a surge in Treasury yields.

 

At the close, the S&P 500 Index fell 1.61% to 5,844.61 points; the Nasdaq Composite Index dropped 1.41% to 18,872.64 points; and the Dow Jones Industrial Average declined 1.91% to 41,860.44 points. All three major indexes recorded their largest single-day declines in a month.

Long-term Treasury bonds became the hardest-hit area of selling. The yield on the U.S. 20-year Treasury bond surged 13 basis points intraday to 5.12%, the 30-year yield rose to 5.09%, and the 10-year yield reached a three-month high of 4.60%. The U.S. dollar weakened against major currencies simultaneously, leading to the so-called "triple kill" in stocks, forex, and bonds.

Large tech stocks broadly declined: Tesla and Apple fell over 2%, while Microsoft, Amazon, and NVIDIA dropped over 1%. Google bucked the trend, rising nearly 3%.

 

Cruise line concepts, real estate services, and oil & gas sectors led the decline: Norwegian Cruise Line fell over 5%, Valero Energy dropped over 3%, and Marathon Petroleum declined over 2%.

 

Precious metals precious metals sector rose: Vista Gold and Endeavour Silver gained over 2%, while Pan American Silver and Royal Gold rose over 1%.

 

Additionally, Bitcoin briefly approached $110,000 intraday, hitting an all-time high.

Key Events

• U.S. Warns Russia of New Sanctions if No Progress in Russia-Ukraine Peace Talks: According to recent news, U.S. Secretary of State Marco Rubio warned that the U.S. would impose new sanctions on Russia if no progress is made in the Russia-Ukraine peace agreement. He also said Russia is expected to propose a ceasefire outline with Ukraine within days, allowing Washington to assess whether Moscow is serious about achieving peace.
• Moderna Withdraws COVID/Flu Combined Vaccine Application: On Wednesday (ET), U.S. vaccine maker Moderna announced the withdrawal of its marketing authorization application for a combined COVID-19 and flu vaccine. The company said it would resubmit the application later this year with efficacy data from large-scale trials of its standalone flu vaccine, expected to be released this summer. Moderna's stock fell 7.82% by Wednesday's close.
• UnitedHealth Accused of Paying Nursing Homes to Reduce Hospital Referrals: UnitedHealth, the largest U.S. healthcare group mired in the "Luigi assassination case" controversy, was exposed by media on Wednesday for secretly paying nursing homes incentives to reduce hospital referrals for seriously ill elderly patients. UnitedHealth issued a statement intraday calling the report "factually incorrect in major respects" and emphasized that the U.S. Department of Justice had investigated and decided not to pursue charges.
• OpenAI to Acquire AI Startup io for $6.5 Billion, Teaming Up With Ex-Apple Designer Ive to Enter Hardware: OpenAI will acquire AI device startup io, co-founded by former Apple designer Jony Ive, in an all-stock deal worth nearly $6.5 billion, joining forces with the legendary designer to enter the hardware sector.
• SGX RegCo Proposes Shift to Disclosure-Based Market Rules: The Singapore Exchange Regulation (SGX RegCo) is proposing major changes to adopt a more disclosure-based regulatory regime, aiming to support enterprises, boost investor confidence, and enhance market efficiency.

Forex & Commodities

COMEX gold futures settled up $28.90, or 0.88%, at $3,313.50 per ounce.

 

At the close, NYMEX July light crude futures fell 46 cents to $61.57 per barrel, down 0.74%; July Brent crude futures dropped 47 cents to $64.91 per barrel, down 0.72%.

 

In late New York trading on May 21, the U.S. Dollar Index fell 0.42% to 99.60, with most non-U.S. currencies rising.

Key Events

• ECB Preparing to Ease Policy? Vice President Says Inflation Target Near Achievement: ECB Vice President Luis de Guindos recently stated that the central bank is close to achieving its 2% inflation target, thanks to a stronger euro and falling energy costs.
• Weak Demand for 20-Year U.S. Treasury Auction Triggers Stock-Bond-Forex Selloff: During U.S. stock trading on Wednesday (May 21), weak demand for the 20-year Treasury auction caused sharp short-term declines in bonds, stocks, and the dollar. The final yield was 5.047%, 24 basis points higher than last month's 4.810% and the second time in history exceeding 5%. The tail spread of ~1.2 basis points over the pre-issuance rate was the largest since December last year.

Cryptocurrency

Bitcoin was up 1.5% at $108,359, with 24-hour trading volume surging 44.7% to $757 billion.

 

Ethereum (ETH-USD) gained 0.7% to $2,512.

 

XRP (XRP-USD) rose 1.3%, BNB (BNB-USD) jumped 3.8%, and Solana (SOL-USD) climbed 1.8%.

 

Dogecoin (DOGE-USD) and Cardano (ADA-USD) surged 3.3% and 3.2%.

 

The total market cap of the cryptocurrency industry rose 1.5% in 24 hours to $3.4 trillion, with trading volume up 39.4% to $166.73 billion.

Key Events

• Stablecoin Bill Ignites Market Sentiment, Bitcoin Hits All-Time High: Progress in U.S. stablecoin legislation pushed Bitcoin to a record high. The draft bill includes stricter restrictions on money laundering, overseas issuers, and tech companies, while strengthening consumer protection. It mandates uniform regulatory standards for domestic and foreign stablecoin issuers.
• Hong Kong's Stablecoin Bill Passed: The Hong Kong Legislative Council passed the Stablecoin Bill on the 21st, establishing a licensing system for fiat stablecoin issuers to improve regulatory frameworks for virtual asset activities, maintain financial stability, and promote financial innovation.