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Markets Update: Asian markets surged on Wednesday, driven by the Bank of Japan's dovish stance, which weakened the yen and boosted investor confidence. This fueled gains across Asia and impacted global markets, with gold falling, oil fluctuating, and agricultural commodities mixed.
Economic Calendar
Global Markets Roundup: 7 August 2024
Asian markets saw a notable increase in activity on Wednesday, driven by the Bank of Japan's unexpected dovish stance on rate hikes, leading to a significant devaluation of the yen.
The Nikkei 225 index continued its upward trajectory, rising by 2.3% following an impressive 10% rebound the day before, reflecting investor confidence after a sharp 13% decline on Monday. This resurgence was fueled by BOJ Deputy Governor Shinichi Uchida's statements, which reassured the markets regarding the central bank's decision to refrain from raising rates amidst the prevailing financial instability, thereby bolstering investor sentiment.
In other parts of Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose by 1.4%. South Korea's KOSPI surged by 2.5%, Taiwan's market soared by 3.4%, China's blue-chip index increased by 0.2%, and Hong Kong's Hang Seng index gained 1%, supported by data showing a 7.2% rise in Chinese imports in July, indicating strong domestic demand despite a slowdown in export growth.
Following a positive performance on Wall Street, Nasdaq futures rose by 1%, although Super Micro Computer's stock plummeted by 12% after failing to meet earnings expectations. S&P 500 futures were up by 0.8%, and EUROSTOXX 50 futures strengthened by 1.2%.
As the demand for safe-haven assets waned, U.S. Treasury yields climbed for a second consecutive day. The 10-year note yield rose to 3.9127%, up from a low of 3.667% on Monday, while two-year yields increased to 4.0183%, recovering from a trough of 3.654%. Market expectations for a potential emergency rate cut by the Federal Reserve have moderated, with futures indicating a reduced likelihood of significant easing this year. Despite a slight decrease in recession concerns in the U.S., economic indicators continue to point towards robust growth in the current quarter, with the Atlanta Fed's GDPNow estimate suggesting a 2.9% annual growth rate.
In currency markets, the yen experienced a marked weakening, with the dollar strengthening by 1.9% to 147.03 yen, recovering from a low of 141.675 on Monday, albeit still significantly below its peak of 161.96 in July. The euro experienced a marginal decline to $1.0916, while the British pound, denoted by GBPUSD, was last transacted at $1.27135, maintaining proximity to the previous day's five-week low. The U.S. dollar index, recognized as DXY and benchmarking the currency against six peers, rose by 0.27% to 103.26, distancing itself from the seven-month low of 102.15 recorded on Monday. Among other currencies, the Australian dollar, represented as AUDUSD, surged by 0.61% to $0.65585, following the central bank's announcement ruling out a potential interest rate cut for the year, citing expectations of a gradual decline in core inflation.
In the commodities market, gold prices dipped by 0.2% to $2,383.77 per ounce, down from last week's high of $2,477. Oil markets remained volatile, with Brent crude rising by 0.1% to $76.57 per barrel and U.S. crude also increasing by 0.1% to $73.29 per barrel, amidst concerns about global demand and potential supply disruptions in the Middle East. The primary wheat contract on the Chicago Board of Trade (CBOT) ZW1! increased by 0.2% to $5.44-1/2 per bushel. Corn ZC1! declined by 0.7% to $4.02-1/2 per bushel, while soybeans ZS1! fell by 0.8% to $10.18-1/4 per bushel. The Arabica coffee futures on the ICE exchange (KC1!) have increased by 4.5% to reach $2.3595 per lb. This particular variety of coffee, known for its mild taste and favored by leading chains such as Starbucks and Tim Hortons, has seen a significant 25% price surge since the start of the year. In contrast, robusta coffee (RC1!), traditionally considered a more budget-friendly option often used in blends for popular supermarket brands, experienced a 5% price rise in London on Tuesday, reaching $4,383 per metric ton. Robusta coffee has witnessed a notable 44% increase in value this year, following a substantial 63% surge in 2023.
Today, the markets are anticipating the German Balance of Trade, German Industrial Production, and Canada Ivey PMI s.a.
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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