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Markets Update: Asian stocks surged to their highest levels in over two and a half years, driven by China's stimulus measures and anticipation of further US interest rate cuts. The yen weakened, while the dollar retreated as investors shifted towards riskier assets. Commodities, including oil and gold, also saw gains.
Economic Calendar
Global Markets Roundup: 24 September 2024
Asian stocks reached their highest level in over two and a half years on Tuesday, buoyed by extensive stimulus efforts in China. Meanwhile, anticipation of further interest rate cuts in the U.S. supported risk appetite and weighed on the dollar. During a highly anticipated press briefing, China's leading financial authorities introduced a series of measures, announcing a 50 basis points reduction in bank reserves and lowering mortgage rates in a bid to boost a sluggish economy.
The actions taken resulted in Chinese stocks surging, with the blue-chip CSI300 Index climbing 2.4%, while the Shanghai Composite index also saw a gain of 2.38%. Hong Kong's Hang Seng Index surged over 3.2% to reach a four-month high. This increase led MSCI's broadest index of Asia-Pacific shares outside Japan to rise by 0.92% to 591.47, reaching levels last observed in April 2022. European stock markets also indicated a strong start, with Eurostoxx 50 futures and German DAX futures up by 0.5%, while FTSE futures increased by 0.355. Japan's Nikkei rose by 0.8% and reached a nearly three-week high.
The yen weakened to 144.11 per dollar. The Bank of Japan maintained interest rates unchanged on Friday, indicating a lack of urgency to further raise borrowing costs. During a speech at a meeting with business leaders in Osaka on Tuesday, BOJ Governor Kazuo Ueda mentioned that it would be appropriate to raise rates if trend inflation increased as expected. In the previous session, U.S. stocks closed slightly higher as traders continued to digest the Federal Reserve's significant move, with policymakers elaborating on the necessity of the 50 basis point cut.
At the same time, the Reserve Bank of Australia kept interest rates unchanged as anticipated and emphasized the need for a tight policy stance, in contrast to the Federal Reserve, which initiated its easing cycle by reducing rates by 50 basis points last week.
The Australian dollar AUDUSD increased by 0.35% to $0.6862, reaching its highest point in 2024 following the policy announcements in China and the hawkish remarks from the RBA. Currently, the markets are divided on whether the U.S. central bank will opt for another 50 basis point cut or a 25 basis point cut in November, as indicated by the CME Fedwatch tool. They are factoring in a total of 76 basis points in easing for this year.
Elias Haddad, Senior Markets Strategist at Brown Brothers Harriman, expressed that the market is overestimating the Fed's ability to ease. He added, "Nevertheless, a substantial improvement in U.S. employment data is likely needed to prompt a significant upward revision in Fed funds rate expectations." The upcoming non-farm payrolls report is scheduled for October 4, and until then, Haddad suggested that a more dovish Fed stance combined with a robust U.S. economy will bolster market confidence and further weaken the dollar against growth-oriented currencies.
The dollar index DXY, which compares the U.S. currency to six other currencies, stood at 100.95, close to the one-year low of 100.21 reached last week. The euro EURUSD remained stable at $1.1117, after declining by approximately 0.5% on Monday due to disappointing business activity reports in the eurozone, leading to increased predictions of further interest rate reductions by the European Central Bank in the current year.
In commodities, oil prices rose, with Brent crude futures BRN1! up 0.92% at $74.58 a barrel, while U.S. crude futures CL1! climbed 1% to $71.14. Oil prices slid on Monday on demand worries as well as weak economic data from Europe. Gold prices hit a record high of $2,637.79 as escalating tensions in the Middle East drew safe-haven flows. Â
In December, arabica coffee KC1! increased by 12.9 cents, or 5.1%, reaching $2.6365 per lb, coming close to the 13-year peak reached a week ago. Traders mentioned a shift in the weather forecast for Brazil in early October, with expectations for reduced rainfall. Rabobank pointed out that the severe drought conditions in Brazil persisted, with predictions indicating another dry week ahead before potential rain. Traders observed increased purchasing activity from the industry. "I'm aware that many coffee roasters seized the opportunity of Friday's price drop to secure deals, leading to some commercial buying," stated a U.S. broker. Meanwhile, November's robusta coffee RC2! climbed by 4.3% to $5,276 per metric ton. Uganda reported an 82.9% surge in the value of its coffee exports in August compared to the previous year, supported by higher global prices, as reported by the state-run sector regulator.
In the upcoming trading sessions, notable events to watch for are the German Ifo report, US Richmond Fed Index release, NBH Policy Announcement, speeches by Fed's Bowman and BoC's Macklem, as well as supply data from the UK, Germany, and the US.
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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