03 June 2024

The Trade Academy Team

07:30 CET - 3 min read

Monday Morning Coffee - Markets Update - 03 June 2024 - APAC Stocks Surge on Rate Cut Hopes, Factory Activity Improves

Markets Update: Equity markets in Asia-Pacific rebounded on positive manufacturing data and central bank easing expectations, with European markets following suit, but investor caution lingers due to potential delays in significant rate cuts and upcoming US economic data.

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Global Markets Roundup: 03 June 2024

Equity markets in Asia-Pacific (APAC) rallied on Monday as investors cheered the prospect of central bank easing, particularly in Europe and potentially Canada. This positive sentiment comes despite lingering concerns about inflation potentially delaying a significant rate cut cycle.

Positive Manufacturing Data Buoys Markets:

• A private survey in China indicated a two-year high in its factory activity index, rising to 51.7 in May from 51.4 in April.
  
• Japan also saw its factory activity expand for the first time in a year during May, while South Korea reported its fastest growth in two years.
  

MSCI's broadest index for Asia-Pacific shares outside Japan (.MIAPJ0000PUS) jumped 1.4%, recouping some of the losses from last week's 2.5% decline. Individual markets also saw gains:

• Chinese blue chips (399300) rose modestly by 0.3%.
  
• Japan's Nikkei (NI225) climbed 1.1%, extending its rebound from Friday's one-month lows.
  
• South Korea's KOSPI gained 1.8%.
  

Global Risk Appetite Improves:

• The positive sentiment in Asia spilled over to European markets, with EUROSTOXX 50 futures (FESX1!) climbing 0.9% and FTSE futures (Z1!) up 0.7%.
  
• Month-end portfolio adjustments likely contributed to a late rally on Wall Street on Friday, with the Nasdaq recording a near 7% gain for May. Early S&P 500 futures (ES1!) were up 0.2%, with Nasdaq futures (NQ1!) adding 0.1%.
  

Central Bank Policy in Focus:

• The European Central Bank (ECB) is widely expected to cut rates by 0.25% to 3.75% on Thursday, potentially marking the first time it eases policy before the U.S. Federal Reserve. However, recent high inflation data has tempered expectations for a rapid series of cuts.
  
• The Bank of Canada is also seen as likely to cut rates at its meeting on Wednesday, with markets pricing in 59 basis points of easing for the year.
  

Investor Focus Shifts to US Data:

• While global easing is a positive for equities, investors remain cautious about the Fed's stance. Little change in US monetary policy is anticipated until September, and even that is uncertain.
  
• Key economic data releases this week, including services and manufacturing surveys as well as the May jobs report, could influence the Fed's outlook.
  

Other Market Movements:

• The Japanese yen remains the weakest major currency despite government intervention efforts. The dollar hovered near its recent peak against the yen (USDJPY: 157.09).
  
• The euro (EURUSD: $1.0855) held firm after benefiting from EU inflation data, but faces resistance at $1.0895.
  
• Gold prices edged slightly higher (GOLD: $2,330) on the back of a four-month rally.
  
• Oil prices (BRENT BRN1!: $81.49, WTI CL1!: $77.38) recovered from an early dip after OPEC+ agreed to extend most production cuts into 2025, with some easing planned from October onwards.
  

Looking ahead, markets anticipate, Türkiye Inflation Rate, German HCOB Manufacturing PMI, UK S&P Global Manufacturing PMI Final, US ISM Manufacturing PMI.

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