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Markets Update: APAC stocks began the week on a tentative note, highlighting the delicate balance between risk appetite and lingering concerns about geopolitical headwinds and China's property woes.
Economic Calendar
Global Markets Roundup: 29 Jan 2024
Asian markets kicked off the week with guarded optimism, but early gains sputtered amid escalating geopolitical tensions and worries about China's property sector.
Rising Tensions: The upbeat sentiment was curbed by news of a drone attack on US forces in Jordan, allegedly linked to Iran. This renewed anxiety about Middle Eastern instability, casting a shadow over risk appetite.
China Woes: Concerns persisted about the slowdown in China's property sector, with Evergrande's ongoing saga weighing on sentiment. Investors remained cautious towards Chinese equities and related risks.
Europe Looks Lower: European equity futures dipped, suggesting a muted open for the European markets despite a strong finish on Friday. The Euro Stoxx 50 future fell 0.2%, a sign of the lingering uncertainty.
Forex in Holding Pattern: Major currencies held steady in early trading. The DXY hovered around 103.50, EUR/USD clung to its 200-day moving average at 1.0841, and USD/JPY remained anchored near 148.00.
Central Bank Talk: ECB Governing Council member Knot threw cold water on hopes for immediate rate cuts in the Eurozone. He emphasized the need for slower wage growth before considering policy adjustments, adding to the cautious market mood.
ASX 200 Up on Energy Boost: Australia's benchmark ASX 200 finished marginally higher by 0.23%, led by a 2.96% surge in the energy sector due to the recent uptick in oil prices. Santos Ltd., a major oil and gas producer, soared 3.7% after its $5.8 billion gas project off the Northern Territory coast received a green light from a Federal Court ruling.
Nikkei 225 Tops 36,000: Japan's Nikkei 225 climbed above the 36,000 mark for the first time since February 2020, driven by gains in Japanese automakers like Toyota Motor Corp. (3.0%) and Honda Motor Co. Ltd. (2.2%). The weaker yen, making Japanese exports more competitive, also contributed to the index's rise. Hang Seng and Shanghai Comp Muted: Both the Hong Kong Hang Seng and mainland China's Shanghai Composite initially edged higher on hopes for stabilization measures announced by Chinese authorities, including the suspension of restricted shares lending. However, gains were capped later in the day as a Hong Kong court ordered China Evergrande Group to be wound up. The news sent shares in the world's most indebted developer plummeting by as much as 21% before trading in the company and its affiliates was halted. Evergrande Fallout Looms: The Evergrande situation casts a shadow over investor sentiment across the region. While the direct impact on other companies may be limited, the uncertainty surrounding the company's future and potential ripple effects on the Chinese property market remain concerns.
Currencies:
DXY: The US Dollar Index (DXY) remained rangebound between 103.47 and 103.57, awaiting catalysts like Fed Chair Powell's speech and the US employment report.
EUR/USD: The single currency loitered around its 200-day moving average at 1.0841, lacking direction in the absence of fresh news.
GBP/USD: Sterling hovered on both sides of 1.2700, with no pertinent catalysts to push it beyond the established range.
USD/JPY: The Japanese Yen regained some ground against the Dollar, retracing towards 148.00 after Friday's dip.
AUD/NZD: The Australian and New Zealand Dollars displayed relative strength, seemingly unfazed by Evergrande's liquidation order.
Fixed Income:
10yr UST futures: US Treasury yields found some support after bouncing from Friday's 111.00 floor, but weekend geopolitical headlines kept price action subdued.
Bund futures: German Bunds edged higher, but gains were limited by ECB official Knot's comments about needing slower Eurozone wage growth before rate cuts.
10yr JGB futures: Japanese Government Bonds (JGBs) saw modest losses, cushioned by the Bank of Japan's intervention in the market.
Commodities:
Crude futures: Oil prices initially jumped on geopolitical tensions following an attack in Jordan, but gains were mostly pared afterwards. Russian officials indicated stable oil output and potential surplus, further capping prices.
Spot gold: The precious metal inched up slightly in choppy trading, with investors cautious ahead of major risk events.
Copper futures: The red metal faced mixed sentiment, juggling a constructive risk tone against ongoing concerns about Chinese developers.
Day Ahead Agenda: The data calendar looks light today, with UK Nationwide House Prices and the US Dallas Fed Manufacturing Business Index the main highlights. Additionally, investors will keep an eye on comments from ECB Vice President de Guindos and supply updates from Treasury Financing Estimates.
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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