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Markets Update: Mixed Opening Expected in European Markets Today as Inflation Concerns Scare Investors; ASX Up, Nikkei Rallies, HK & Mainland Lag Ahead of Key Events.
Economic Calendar
Global Markets Roundup: 22 Jan 2024
Following a catalyst-light weekend and weakness in Chinese markets, stocks in the Asia-Pacific region opened the week on a mixed note, tempering some of the early momentum gained from Wall Street's record highs last week. The U.S. Federal Reserve's Mary Daly, a voting member this year, threw cold water on hopes of swift rate cuts, stating on Friday that significant work remains to be done in curbing inflation. This cautious outlook from the Fed dampened risk sentiment across the globe. Despite the subdued Asian session, European equity futures are pointing towards a brighter start, with the Euro Stoxx 50 future jumping 0.8% after the cash market closed down a mere 0.1% on Friday. In currency markets, the U.S. Dollar Index (DXY) sits slightly softer around the 103 level, offering little direction to EUR/USD and USD/JPY which are stuck in tight ranges near 1.09 and 148, respectively.
The ASX 200 rose on Monday, led by gains in consumer and real estate sectors. Investors were cheered by slightly lower yields, boosting demand for yield-sensitive stocks. In contrast, miners faced pressure after weaker-than-expected quarterly production reports from South32 and Lynas Corporation. Japan's Nikkei 225 rallied, breaking above the 36,500 mark for the first time, with anticipation building ahead of the Bank of Japan's policy announcement tomorrow. Investors await any clues on the central bank's future monetary policy stance. Hong Kong's Hang Seng and mainland China's Shanghai Composite underperformed their regional peers. Tech and property sectors witnessed notable weakness, dragging down the Hang Seng Mainland Properties Index to a record low. Mainland sentiment remained subdued amidst ongoing concerns about the economic slowdown and the decision to keep benchmark loan prime rates unchanged, as expected.
Foreign Exchange:
DXY Subdued: The Dollar Index (DXY) eased slightly in quiet trading, lacking major headlines and with the Federal Reserve in its pre-meeting blackout period. Key US data releases later this week, including GDP and the Fed's preferred PCE inflation gauge, will be closely watched for direction.
EUR/USD Recovers 1.0900: The Euro clawed back the 1.0900 level against the Dollar, but upside momentum remains capped ahead of the European Central Bank meeting this week.
GBP/USD Steady:Â The Pound held steady around the recently reclaimed 1.2700 mark against the Dollar amid a dearth of pertinent news.
USD/JPY Lower:Â The Dollar dipped briefly below 148.00 Yen due to a softer Dollar and narrower yield differentials.
AUD and NZD:Â The Australian and New Zealand Dollars initially benefited from a positive risk environment but later surrendered their gains as catalysts faded and the economic calendar remained quiet.
Commodities:
Crude Flat Despite Libya Restart: Crude oil futures held steady despite ongoing geopolitical risks, facing mild pressure after the resumption of production at Libya's El Sharara oilfield following a protester sit-in.
Gold Rangebound: Spot gold traded within a narrow range, supported by a slightly softer Dollar but lacking safe-haven demand.
Copper Edges Lower:Â Copper futures retreated marginally after Friday's risk-driven rally faded.
Fixed Income:
UST Yields Edge Higher: 10-year US Treasury futures continued their rebound from last week's lows, buoyed by strong consumer confidence data. Further supply of 2-, 5-, and 7-year Treasuries is expected from Tuesday.
Bund Futures Gain Traction:Â German Bund futures firmed above 134.00 after breaking through Friday's trading range.
JGBs Mixed: 10-year Japanese Government Bond futures edged higher, but price action remained choppy as the Bank of Japan began its two-day policy meeting, with no changes expected. The latest enhanced liquidity auction for 10-, 20-, and 30-year JGBs saw a lower-than-previous bid-to-cover ratio.
The economic calendar for today is relatively light, with the US Leading Index Change and Bank of Japan Supplementary Operational Liquidity Offer Scheme (SLOOS) the main highlights. Later in the week, investors will keep a close eye on comments from European Central Bank President Christine Lagarde, earnings from United Airlines, and bond supply from the Eurozone and United Kingdom.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team