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Markets Update: APAC Stocks Mostly Positive, but Cautious Ahead of Debt Limit Deadline
Today's important market events:
[USD] FOMC Member Bullard Speaks - 14:30 CEST
Asian stocks were mostly positive on Monday, but price action remained rangebound amid cautiousness as the U.S. debt limit deadline draws closer. President Joe Biden said his discussion with House Speaker Kevin McCarthy on Sunday went well, and the two leaders will talk again on Monday. Meanwhile, Federal Reserve Bank of Minneapolis President Neel Kashkari, a voter this year, said he is open to foregoing a June rate hike but would object to any kind of declaration that the central bank is done raising rates. European equity futures were indicative of a flat open, with the Euro Stoxx 50 +0.1% after the cash market closed up 0.6% on Friday. The U.S. dollar index was steady above the 103 mark, while the euro held at 1.08 against the dollar.
Equity Space
ASX 200 was subdued amid weakness in financials, although losses were cushioned by the improving trade environment between Australia and its largest trading partner, China.
Nikkei 225 was indecisive as the momentum from its recent rally to 33-year highs initially waned, and with the mood also clouded by the surprise contraction in Machinery Orders. However, the index later caught a second wind and broke above the 31,000 level.
Hang Seng and Shanghai Comp. traded higher albeit with the mainland choppy after mixed commentary from the G7 and frictions related to China’s ban on Micron from key infrastructure.
The People's Bank of China (PBoC) provided no surprises and kept its benchmark lending rates unchanged with the 1-year and 5-year LPRs kept at 3.65% and 4.30%, respectively.
European equity futures are indicative of a flat open with the Euro Stoxx 50 +0.1% after the cash market closed up 0.6% on Friday.
FX Space
The U.S. dollar index (DXY) was contained above the 103 mark after last week’s more balanced comments from Fed Chair Powell who kept the prospects of a pause at the June meeting in play and stated that rates may not need to rise as much due to bank stress. Meanwhile, Federal Reserve Bank of Minneapolis President Neel Kashkari said he is open to foregoing a June rate hike but would object to any kind of declaration that they are done lifting rates.
The euro (EUR/USD) extended on its recent rebound with a firmer footing above the 1.0800 level and following comments from ECB President Christine Lagarde that the central bank has more ground to cover to tame inflation.
The British pound (GBP/USD) eked marginal gains but with upside capped by a lack of pertinent catalysts from the UK.
The Japanese yen (USD/JPY) faded some of last week’s advances and slipped back below the 138.00 level.
Fixed Assets
The 10-year U.S. Treasury yield was firmer after recent Fed comments and as Washington scrambles to avert a default.
German bund yields were mildly higher after prices rebounded from support around the 134.00 level.
The 10-year Japanese government bond (JGB) yield was firmer alongside gains in their global peers and after Bank of Japan Governor Haruhiko Kuroda’s comments last Friday conformed to the dovish script.
Commodities
Crude oil futures marginally declined amid a lack of energy-related news and US default concerns.
The European Union plans to increase joint purchasing of natural gas after the success of the common gas scheme, according to the Financial Times.
Spot gold traded rangebound and held on to Friday's gains alongside a contained greenback.
Copper futures trickled lower throughout the session owing to the US debt ceiling uncertainty
Looking ahead, highlights for the week include:
Eurozone Consumer Confidence (Flash)
Speeches from Federal Reserve Bank of St. Louis President James Bullard and Federal Reserve Bank of Richmond President Thomas Barkin
Speeches from European Central Bank President Christine Lagarde, ECB Executive Board Member Philip Lane, ECB Vice President Luis de Guindos, and ECB Executive Board Member Fabio Panetta
Fixed income supply from the eurozone
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team