Global Markets Roundup: 22 Mar 2024

On Friday, APAC stocks were poised for a weekly gain, with the Nikkei soaring to unprecedented heights, buoyed by a global rally triggered by the Swiss National Bank's unexpected decision to slash interest rates. This move prompted investors to speculate on which major central bank might follow suit. The SNB's reduction of 25 basis points on Thursday injected fresh optimism into global risk sentiment, propelling Wall Street to close at record highs as markets anticipated significant central bank interventions in lowering borrowing costs throughout the year.

In early trading on Friday, MSCI's broadest index of Asia-Pacific shares outside Japan experienced some profit-taking after a robust surge of nearly 2% in the previous session, ultimately settling 0.17% lower. Nonetheless, the index remained on course to secure a gain of over 1% for the week. Several key benchmarks in Asia reached new milestones, with Japan's Nikkei 225 and Taiwan's weighted index both reaching record highs. The Nikkei was on track for a weekly gain of nearly 6%, while the Taiwan Weighted Index was poised for a 3% increase. Meanwhile, South Korea's KOSPI hit a two-year peak, reflecting the broader positive sentiment.

In contrast, stocks in China and Hong Kong faced downward pressure, with the CSI300 index down more than 0.5% and the Hang Seng Index nearly 2% weaker, partly due to the yuan's slide past the 7.2 per dollar level for the first time since November. Despite the U.S. Federal Reserve maintaining its projection of three rate cuts this year, which initially caused the dollar to weaken, it swiftly regained ground. In Europe the EURO STOXX 50 Futures in Pre-market, last update at 06:57 UTC+1 trade at 4998 EUR (−13, −0.26%).

Following the SNB's move, traders swiftly increased bets on a potential rate cut by the European Central Bank (ECB) and the Bank of England (BoE) in June. BoE Governor Andrew Bailey remarked on Thursday, after the central bank's rate decision, that the British economy is progressing towards a stage where rate reductions can commence, a sentiment echoed by two of his colleagues who abandoned their calls for further increases.

In currency markets, on Friday, the USDCNY surged to 7.2254 per dollar, exerting a broad upward pressure on the dollar in foreign exchange markets. This resulted in the euro, EURUSD, hitting a three-week low at $1.0834, marking a 0.5% decrease for the week. Both the Australian and New Zealand dollars experienced declines of over 0.5%, positioning them for weekly losses. The Aussie, AUDUSD, reached $0.6524, marking a 0.5% weekly decrease, albeit finding some support from robust job figures released on Thursday. Meanwhile, the kiwi, NZDUSD, suffered a significant 1.2% drop to $0.6012, reaching a four-month low, primarily influenced by weakening economic indicators in New Zealand against a backdrop of robust U.S. data, hinting at a potentially accelerated rate reduction in New Zealand.

In a week marked by central bank meetings, the Swiss National Bank took markets by surprise by cutting interest rates, citing the strength of the franc. Consequently, the franc, USDCHF, the top-performing G10 currency in 2023, plummeted by over 1% to 0.8894 per dollar, its lowest level in four months. Against the euro, EURCHF, it slid to a nine-month low, edging closer to parity.

The Bank of Japan also made history by transitioning away from negative short-term rates and implementing longer-run yield caps. However, as anticipated, the yen, USDJPY, depreciated following the announcement, hovering near multi-decade lows at 151.51 per dollar. The euro/yen, EURJPY, soared to its highest level since 2008 at 165.37, while the Aussie broke through the 100-yen mark, AUDJPY, for the first time since 2014.

Sterling, GBPUSD, experienced a decline subsequent to the Bank of England's decision to maintain interest rates unchanged, supported by two hawkish committee members who had previously advocated for a rate hike. Sterling marked a 0.7% weekly decrease, touching a three-week low at $1.2635 during the Asian session. The U.S. dollar index, DXY, continued its upward trajectory for the second consecutive week, rising by 0.8% to 104.21.

Commodities saw mixed movements, with Brent falling to $85.35 a barrel and U.S. crude easing to $80.66 per barrel. Spot gold dipped to $2,174.89 an ounce after reaching an all-time high on Thursday. The base metals market witnessed a predominantly downward trend, signaling a trajectory towards a weekly decline. This shift was primarily attributed to the bolstered strength of the US dollar, rendering metals priced in greenbacks comparatively more costly for investors utilizing alternative currencies. Three-month copper on the London Metal Exchange (LME) HG1! declined 0.9% to $8,869 per metric ton by 0539 GMT, while the most-traded May copper contract on the Shanghai Futures Exchange (SHFE) HG1! fell 0.8% to 72,720 yuan ($10,064.22) a ton. LME aluminium ALI1! shed 0.7% to $2,285.50 a ton, nickel NICKEL1! dropped 1.4% to $17,300, zinc ZNC1! declined 0.8% to $2,504.50, tin FTIN1! lost 1.7% to $27,400, while lead LEAD1! edged up 0.1% to $2,052.

In soft commodities, the market saw minimal movement in Arabica coffee prices, with May arabica coffee (KC1!) remaining relatively unchanged at $1.824 per pound. In contrast, July New York cocoa (CC2!) experienced a notable increase, settling up $250, or 3.2%, to $8,011 per metric ton. This surge came after reaching a record high of $8,067 earlier in the session. Meanwhile, both corn and wheat futures concluded the day with modest gains. CBOT May soybeans (SK24) saw an uptick, settling up 2-1/2 cents at $12.12 per bushel, reaching the highest level on a continuous chart of the most-active contract ZS1! since January 26, after rising to $12.26-3/4. Similarly, CBOT May corn (CK24) closed up 1-3/4 cents at $4.40-3/4 per bushel, while May wheat (WK24) settled up 1-3/4 cents at $5.46-3/4 per bushel.

Looking ahead to key economic events for today:

• UK Retail Sales: This data likely refers to February 2024 numbers, as retail sales are usually reported a month or so in arrears. It will be interesting to see if the positive trend from January continues (3.4% increase).
  
• German Ifo Business Climate: This is a closely watched survey that gauges business sentiment in Germany. A high reading suggests optimism and economic growth, while a low reading indicates pessimism and potential contraction.
  
• Canadian Retail Sales: Similar to the UK data, this will likely show retail sales figures for February 2024 in Canada.
  
• Japan's Rengo (2nd tally): Rengo is a leading Japanese trade union confederation. This might be a reference to a second round of voting or confirmation on a specific issue.
  
• Central Bank Comments: We have several central bank officials scheduled to speak today:
  
• Philip Lane (European Central Bank)
  
• Jerome Powell (Federal Reserve)
  
• Andy Barr (Federal Reserve)
  
• Raphael Bostic (Federal Reserve)
  

You can view all markets data and charts here.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team

Rating: Mixed Outlook

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