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Friday Morning Coffee - Markets Update - 28 June 2024 - APAC Shares Poised for Five-Month Winning Streak; Yen Hits 38-Year Low


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Markets update: Asian stocks eyed a fifth month of gains fueled by hopes of a Fed rate cut this year, despite a risk-filled Friday with the release of key U.S. inflation data and the first presidential debate potentially impacting market sentiment.

 

Economic Calendar

 

Global Markets Roundup: 28 June 2024


Asian stocks were set to achieve a fifth consecutive month of gains on Friday, driven by expectations that cooling U.S. inflation could lead the Federal Reserve to lower interest rates this year. Meanwhile, the yen plummeted to a 38-year low against the dollar. Friday's market activity is filled with risk events following a relatively calm week. The focus is on the release of May's U.S. core personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure.


Asian markets remained largely unaffected by the first U.S. presidential debate between Democratic President Joe Biden and his Republican rival Donald Trump ahead of the November election. However, U.S. stock futures and the dollar rose as investors began to favor a Trump victory.


S&P 500 futures ES1! and Nasdaq futures (NQ1!) increased by 0.2% and 0.32%, respectively. EUROSTOXX 50 futures FESX1! gained 0.22%, while FTSE futures (Z1!) advanced 0.24%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.35%, aiming for a monthly gain of over 3%, its best performance since February. Anticipation of Fed policy easing and momentum from the artificial intelligence boom have driven a risk rally across stock markets, propelling Wall Street to record highs and lifting Asian shares. Chinese markets reversed early losses, with the benchmark CSI300 up 0.72% and Hong Kong's Hang Seng Index HSI gaining 0.57%. The yen's weakness has benefited the Nikkei NI225, which rose 0.4% and is targeting a monthly gain of 2.6%.


Traders now see a 64% chance of a Fed rate cut in September, up from 50% a month ago, according to the CME FedWatch tool. However, these expectations could change if Friday's core PCE figures exceed predictions.


In currency markets, the dollar DXY was strong, eyeing a monthly gain of 1.3% against a basket of currencies. The Australian dollar AUDUSD lost 0.35% to $0.6624, while the euro EURUSD  traded 0.13% lower to $1.0690, heading for a monthly decline of approximately 1.4%. The euro's decline is attributed to political turmoil in the EU, with France's snap election this weekend. The yen USDJPY tumbled to 161.27 per dollar, its weakest since 1986, before recovering slightly. The Japanese currency has fallen around 2.25% this month and over 12% this year against a robust dollar, affected by significant interest rate differentials between the U.S. and Japan. This has bolstered the yen's appeal as a funding currency for carry trades, where investors borrow in low-interest currencies and invest in higher-yielding assets.


The yen's latest decline has kept investors alert for possible intervention from Tokyo. Japanese authorities spent 9.79 trillion yen ($60.94 billion) in late April and early May to strengthen the yen USDJPY by 5% from its 34-year low of 160.245. Data on Friday showed core consumer prices in Tokyo rose 2.1% in June from a year earlier, highlighting the Bank of Japan's challenge in timing its next interest rate hike. The weak yen is keeping inflation above the 2% target but also hurting consumption. Japan's government appointed financial regulation expert Atsushi Mimura as its top currency diplomat, replacing Masato Kanda, who managed the largest currency intervention on record this year to combat sharp yen declines.


In commodities/agricultural commodities, GOLD struggled under a strong dollar, falling 0.13% to $2,324.40 an ounce. Brent crude oil BRN1! futures rose 0.61% to $86.92 a barrel, while U.S. West Texas Intermediate crude CL1! futures gained 0.67% to $82.29 per barrel. Three-month copper on the LME HG1! edged 0.5% higher at $9,563 per metric ton.  Corn ZC1! climbed 0.3% to 4.23-3/4 a bushel and soybeans ZS1! jumped 0.4% at $11.09-1/4 a bushel. September arabica coffee KC2! closed 0.9% higher, at $2.2635 per lb. September London cocoa CC2! ​closed 7.4% lower, to 6,139 pounds per ton.  August white sugar SF1! edged 2.8% higher at $585.10 a metric ton.


Looking ahead today markets anticipate, German Unemployment Change/Rate, Italy Inflation Rate Prel, US Core PCE Price Index, US Personal Income/Spending, Canada GDP, Michigan Consumer Sentiment.


 

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team

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