Wednesday Market Recap
US stocks plunged Wednesday, with the Dow dropping more than 800 points, as a weak 20-year Treasury auction sent yields soaring. Investors grew increasingly concerned that Trump’s new budget proposal could further strain the country’s already massive fiscal deficit.
The Treasury Department auctioned $16 billion in 20-year bonds at a final yield of 5.047%, marking only the second time yields at this maturity have breached 5%. The result was 24 basis points higher than April’s 4.810% and exceeded the expected yield of 5.035% by 1.2 basis points—the largest tail since December 2023.
Following the auction, all three major indexes accelerated losses. The 10-year yield spiked over 10 basis points, and the US Dollar Index fell to a two-week low.
“With structural shifts in demand and ongoing trade and currency policy uncertainty, near-term risks are tilted toward a steeper curve,” said JPMorgan strategists Jay Barry and Jason Hunter.
Markets are closely watching the progress of Trump’s tax-cut-heavy budget plan.
“There’s deep skepticism about the Trump administration’s ability to cut spending,” said James Kniveton, senior FX trader at Convera.
Earlier this week, Trump increased pressure on House Republicans to pass a sweeping bill that would extend trillions in tax cuts and impose deep spending cuts.
US Stocks Highlights
Tech stocks broadly declined:
- Tesla, Apple down over 2%
- Microsoft, Amazon, Nvidia down more than 1%
- Google defied the trend, rising nearly 3%
Biggest sector losers included:
- Cruise lines, real estate services, and energy
- Norwegian Cruise Line -5%
- Valero Energy -3%+
- Marathon Oil -2%+
Precious metals performed well:
- Vista Gold, Eldorado Gold +2%+
- Pan American Silver, Royal Gold +1%+
XPeng Soars on Earnings Beat:
Chinese EV maker XPeng surged 13%, defying the broader market selloff. On its earnings call, Chairman He Xiaopeng projected the company would become profitable by Q4 and deliver positive full-year free cash flow.
Other notable Chinese ADRs:
- GDS Holdings +7%
- 21Vianet +4%
- Li Auto +3%
- iQIYI -8%
- Baidu -4%
US Market – Technical Analysis
US Market Close
- Dow Jones -816.80 pts (-1.91%) → 41,860.44
- Nasdaq -270.07 pts (-1.41%) → 18,872.64
- S&P 500 -95.85 pts (-1.61%) → 5,844.61
Hong Kong Markets Highlights
Hong Kong stocks traded lower across all three major indexes.
Tech stocks led the decline:
- Baidu, Bilibili -3%+
- Kuaishou, Lenovo -2%+
Bright spots included:
- Gold miners: Datang Gold +5%+
- Airlines: China Southern Airlines +2%+
XPeng Gains Post-Earnings:
XPeng’s Hong Kong shares rose over 7%, buoyed by better-than-expected Q1 results and a promising product pipeline.
- Revenue: ¥15.81 billion, up 141.5% YoY, beating estimates
- Adjusted net loss: Narrowed to ¥430 million, a 69.8% YoY improvement
Hong Kong Market – Technical Analysis
Hong Kong Market Close
- Hang Seng Index -0.55% → 23,695.88
- Hang Seng Tech Index -0.66% → 5,306.98
- China Enterprises Index -0.48% → 8,619.15
A-Share Markets (Midday) Highlights
Mainland indexes showed mixed performance in the morning session.
- Market turnover: ¥745.7 billion, down ¥33.2 billion from the previous day
- Decliners: Over 4,200 stocks were in the red
Sector Gainers:
- Defense, banking, and aviation manufacturing
- Top movers: Guoke Tiancheng, 4C Electronics, Guorui Tech (limit up)
- Biotech still strong: 3SBio hit its fourth consecutive limit-up
Banks rebounded, led by Qingdao Bank and Chongqing Rural Commercial Bank
Sector Decliners:
- Solid-state batteries and pet economy
- Reliable Co., One Unified Konjac, Jeya Biotech -5%+
- Solid-state battery plays like Ningxin Materials, Changhong Energy also dropped over 5%
Mainland Market – Technical Analysis
Mainland Market Midday Snapshot
- Shanghai Composite flat → 3,387.63
- Shenzhen Component -0.28% → 10,264.93
- ChiNext Index -0.44% → 2,056.22
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