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Markets Update: The Nikkei plunges as markets consider the possibility of higher rates. China is preparing to reduce mortgage rates in a rush to stimulate the economy. Fed Chair Powell to deliver a speech before the payrolls report. Despite turmoil in the Middle East, oil prices remain low due to abundant supply.
Global Markets Roundup: 30 September 2024
Most of the stock markets in Asia showed strength on Monday following China's announcement of additional stimulus measures. However, the Nikkei plummeted due to worries about Japan's new prime minister's inclination towards normalizing interest rates. Ongoing Israeli attacks in Lebanon contributed to geopolitical instability, while oil prices remained low due to concerns about rising supply. The upcoming week is filled with significant U.S. economic data, with focus on a payrolls report that may influence the Federal Reserve's decision on a potential substantial rate cut in November.
Early in the day, the Nikkei's NI225 experienced a 4.0% decrease while investors anticipated more information from new Prime Minister Shigeru Ishiba, who had previously criticized the Bank of Japan's loose monetary policies. However, he adopted a more cooperative approach over the weekend, stating that given the economic conditions, monetary policy "should remain accommodative." This declaration assisted in the recovery of the dollar by 0.5%, reaching 142.85 yen USDJPY, after a 1.8% decline on Friday from its peak of 146.49. Ishiba has endorsed the BoJ's strategy to normalize monetary policy, although the pace and timing are still uncertain. The implementation of additional stimulus measures could further boost spending, strengthening the BoJ's commitment to gradually increase interest rates. Â | NI225 | USDJPY
In China, the central bank announced plans to instruct banks to reduce mortgage rates for existing home loans by the end of October, with an expected average decrease of 50 basis points. This move comes after a series of monetary, fiscal, and liquidity support measures unveiled last week, constituting Beijing's most significant stimulus package since the pandemic began. During the previous week, the blue-chip CSI300 index and Shanghai Composite index saw gains of approximately 16% and 13% respectively, while Hong Kong's Hang Seng index surged by 13%. The MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) increased by 0.2% on Monday, following a 6.1% surge the previous week to reach a seven-month high. Wall Street also experienced positive momentum last week, supported by favorable core U.S. inflation data on Friday, which raised the possibility of a further 0.5% rate cut by the Fed. Futures (0#FF:) indicate a 53% likelihood of a 50 basis point Fed rate reduction on Nov. 7, though uncertainties linger due to the upcoming presidential election two days prior. A series of speeches by Federal Reserve officials is scheduled for this week, with Chair Jerome Powell leading the discussions on Monday. Additionally, data on job openings, private hiring, and ISM surveys on manufacturing and services are expected. S&P 500 futures (ES1!) rose by 0.1% on Monday, while Nasdaq futures (NQ1!) increased by 0.2%. The S&P 500 index (SPX) has recorded a 20% year-to-date increase and is on course for its most robust January-September performance since 1997. FESX1! | Z1! | NQ1! | ES1!
In the currency markets, the dollar index remained steady at 100.41 DXY after a slight decline of 0.3% last week. The USDJPY pair rebounded by 0.5% to 142.85 yen after dropping 1.8% on Friday from its peak of 146.49. The euro was valued at $1.1169 EURUSD, having recovered on Friday following a favorable U.S. inflation report. EURUSDÂ | USDJPY
In commodities, a weaker dollar, along with declining bond yields, supported gold in reaching a record high of $2,685 per ounce. The current price stands at $2,664 per ounce GOLD, with gold poised for its strongest quarter performance since 2016. Oil prices displayed volatility due to concerns over potential increased supply from Saudi Arabia conflicting with tensions in the Middle East. Brent BRN1! dropped by 1 cent to $71.86 per barrel, while U.S. crude CL1! increased by 3 cents to $68.21 per barrel. The most active wheat contract on the Chicago Board of Trade (CBOT) ZW1! was trading down 0.6% at $5.76-1/2 per bushel. Meanwhile, CBOT corn ZC1! was 0.4% lower at $4.16-1/4 per bushel, and soybeans ZS1! were down 1.2% at $10.53 per bushel. GOLD | CL1! | ZC1! | ZS1! HG1!
Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.
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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