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Markets Update: APAC Stocks Slide as Yields Rise, Aussie Miners Tumble, European Markets Follow Suit.
Economic Calendar
Global Markets Roundup: 16 Jan 2024
Asia-Pacific stocks tumbled on Tuesday, lacking direction from Wall Street and facing headwinds from climbing bond yields. The risk-off sentiment sent investors rushing towards the safety of the US dollar, pushing the DXY closer to the 103 mark and lifting USD/JPY back to the 146 handle. Antipodean currencies lagged behind their major counterparts. In Europe, the bearish tone is expected to continue, with futures pointing to a lower open for major indices. The Euro Stoxx 50 future is down 0.6%, mirroring the 0.6% decline in the cash market on Monday. The lack of hawkish signals from the ECB further weighed on European equities, as Bund futures remained weak at the previous day's lows.
Australia's ASX 200 bore the brunt of the selloff, falling 0.7% as mining giants led the declines. Rio Tinto's announcement of lower iron ore output and shipments weighed heavily on the resource-heavy index. BHP Group and Fortescue Metals followed suit, mirroring the broader bearish sentiment towards commodity-linked equities. Japan's Nikkei 225 also surrendered ground, dipping below the psychologically important 36,000 level. The index was pressured by a combination of slightly higher yields and firmer-than-expected producer price index (PPI) data. The PPI data suggested continued inflationary pressures in Japan, potentially prompting further hawkish signals from the Bank of Japan, which added to investor unease. Other regional markets echoed the subdued mood, with Hong Kong's Hang Seng and mainland China's Shanghai Composite both declining modestly.
Currencies:
DXY: The US Dollar Index (DXY) found its footing, rising above 1.09 as risk aversion took hold. Eurozone yields ticked higher recently, but hawkish rhetoric from the European Central Bank (ECB) pushing back on immediate rate cuts kept EUR/USD under pressure, dipping below 1.0950.
GBP/USD: The British Pound joined the downtrend, breaching 1.2700 alongside its cyclical peers on disappointing consumer confidence data from Australia.
USD/JPY: The Japanese Yen weakened against the firmer Dollar, with USD/JPY reclaiming the 146.00 level. JPY-crosses also suffered due to the general risk-off sentiment.
Fixed Income:
USTs: US Treasury futures remained subdued after the holiday closure, mirroring losses across global bond markets.
Bunds: German Bund futures languished near their lows from the previous day, reflecting the ECB's reluctance to cut rates soon.
JGBs: Japanese Government Bond (JGB) futures retreated as mild Japanese yield gains and unexpectedly strong producer price index (PPI) data weighed on sentiment. The latest 5-year JGB auction also saw lower bid-to-cover ratio and accepted prices compared to the previous month.
Commodities:
Crude: Crude oil futures vacillated between modest gains and losses, with geopolitical tensions offering some support counterbalanced by the overall risk-averse climate.
Gold: Spot gold lackedluster performance, testing the USD 2,050/oz level as the Dollar gained strength.
Base Metals: Copper futures fell overnight, pressured by the broader risk aversion and lower base metal prices across the board. First Quantum announced a 30% workforce reduction at its Ravensthorpe nickel mine in Australia due to plummeting nickel prices and rising operating costs.
Tuesday's economic calendar is packed with key data releases and central bank speeches, keeping market participants occupied. German final CPI, UK unemployment and earnings figures, and German ZEW economic sentiment are some of the highlights. Across the Atlantic, the NY Fed Manufacturing Index and Canadian CPI will be closely watched. Additionally, speeches from ECB's Villeroy, BoE's Bailey, and Fed's Waller are scheduled, potentially adding further volatility to the markets. Beyond economics, earnings season kicks off in earnest, with reports from major financial institutions like Goldman Sachs, PNC Financial Services, Morgan Stanley, and Charles Schwab expected to provide insights into corporate health and the broader economic outlook.
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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