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Markets Update: APAC Stocks Mixed, DXY Steady, UST Futures Ease, Spot Gold Surges and Retreats, Bitcoin Extends Gains.
Economic Calendar
Global Markets Roundup: 04 Dec 2023
Asia-Pacific stocks traded in a mixed manner, initially showing a positive bias following last Friday's gains on Wall Street. The upside, however, was capped in the region due to quiet macro newsflow over the weekend and ahead of key events this week. The US Dollar Index (DXY) edged marginally higher in otherwise quiet trading, while 10-year UST futures mildly pulled back but retained most of Friday's gains. Crude futures remained subdued. Spot gold initially surged by more than 3% shortly after the open, breaching record highs above the USD 2,100/oz level. However, it spent the rest of the session giving back the majority of those gains. Bitcoin rallied after breaking above the USD 40,000 level for the first time in more than a year. It gradually extended its gains, breaching above USD 41,000. In a significant development, the US Pentagon acknowledged reports of an attack on USS Carney and several commercial vehicles in the Red Sea. The US stated that USS Carney engaged and shot down a drone launched from Houthi-controlled areas in Yemen.
The Australian ASX 200 index rose on Monday, led by gains in yield-sensitive sectors such as technology and real estate. Gold miners also gained after the precious metal initially surged above USD 2,100/oz, setting a fresh record high, before retreating from most of the early spike. The Japanese Nikkei 225 index lagged behind, briefly approaching the 33,000 level on the downside, pressured by recent currency strength. The Hong Kong Hang Seng and Shanghai Composite indexes traded indecisively. While PBoC Governor Pan's repeated support pledges provided some solace, a substantial net liquidity drain and geopolitical frictions in the South China Sea weighed on sentiment. Additionally, attention remained on Evergrande's winding-up hearing, which the Hong Kong court adjourned to January 29th, giving the company some breathing room to work on its restructuring proposal. European equity futures are indicative of a slightly higher open, with the Euro Stoxx 50 futures index up 0.1%. This follows a 0.8% gain in the cash market on Friday.
FX
The US Dollar Index (DXY) edged marginally higher in otherwise quiet trade, confined within a narrow range of 103.12-103.34. The lack of fresh catalysts from the US, as the Federal Reserve is currently in its blackout period ahead of the upcoming policy meeting, limited price action.
EUR/USD traded sideways beneath the 1.0900 level, with the single currency largely ignoring weekend comments from ECB's Nagel who suggested that it is too early to declare victory over inflation.
GBP/USD faced mild pressure after failing to hold on to the 1.2700 handle.
USD/JPY languished at a sub-147.00 level, continuing the narrowing of US-Japan yield differentials seen last week.
AUD and NZD were choppy alongside the mixed risk tone and data releases from Australia. Market participants await tomorrow's RBA meeting, with many anticipating a hawkish pause by the central bank.
The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.1011 vs exp. 7.1271 (prev. 7.1104).
FIXED INCOME
10-year UST futures pulled back slightly, but held onto most of Friday's gains, which were driven by soft ISM Manufacturing data and market expectations of rate cuts in Q1 next year.
Bund futures took a breather following recent advances, with the downside supported by near-term support at 133.50.
10-year JGB futures faded most of last week's late gains, retreating after hitting resistance near the 147.00 level.
COMMODITIES
Crude oil futures remained subdued, with Brent and WTI languishing beneath USD 79/bbl and USD 74/bbl, respectively. Demand was hampered by the mixed risk appetite, while geopolitical headlines over the weekend had little effect on prices.
In energy news, the US Department of Energy announced on Friday that oil companies will return 4 million barrels of oil to the US Strategic Petroleum Reserve (SPR) by February from the previous exchange, and the US seeks to buy up to 3 million more barrels of oil for SPR for February delivery.
Additionally, the US, UK, and EU are tightening compliance and increasing leverage for buyers to keep getting discounted oil. They have jointly reached out to Liberia, the Marshall Islands, and Panama to warn of increased circumvention of the Russian oil price cap.
Kuwait Oil Company reported that several people were injured after a limited fire broke out at an oil line, although production remained unaffected.
Spot gold initially surged by more than 3% shortly after the open, with prices breaching record highs above the USD 2,100/oz level amid speculation that the Fed could be done hiking rates. However, prices gave back the majority of the gains throughout the rest of the session.
Copper futures trickled lower to below USD 3.90/lb amid the cautious mood in its largest purchaser China.
Looking ahead, key highlights for the week include German Trade, EZ Sentix Index, US Durable Goods, Factory Orders, Australian Services & Composite PMI, Japanese CPI, and speeches from ECB's Lagarde and Elderson.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team