10 June 2024

The Trade Academy Team

07:30 CET - 3 min read

Monday Morning Coffee - Markets Update - 10 June 2024 - APAC Stocks Slide on Rate Hike Jitters, French Election Upheaval

Markets Update: Asia-Pacific stocks fell on Monday as a strong U.S. jobs report dampened expectations of Federal Reserve rate cuts this year, while the surprise French snap election announcement roiled European markets and sent the euro tumbling against a strengthening dollar.

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Global Markets Roundup: 10 June 2024

London, UK - June 10, 2024 - Asia-Pacific (APAC) equities retreated on Monday as investor sentiment shifted regarding the likelihood of Federal Reserve rate cuts this year, fueled by a robust U.S. labor market report. Additionally, political uncertainty in Europe flared after a snap election announcement in France, impacting the euro. Trading activity remained subdued across Asia due to public holidays in several key markets, including Australia, China, Hong Kong, and Taiwan.

Despite the lower volume, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) shed 0.46%. U.S. stock futures hinted at a muted open, with S&P 500 futures ES1! and Nasdaq futures (NQ1!) down marginally by around 0.03% each. The dollar, meanwhile, strengthened. Japan's Nikkei NI225 index benefited from the weaker yen, advancing 0.42%. The Bank of Japan (BOJ) is scheduled to hold its two-day monetary policy meeting this week, where it might offer fresh insights on potentially scaling back its substantial bond-buying program. This reversal in risk appetite follows Friday's U.S. nonfarm payrolls report, which revealed a surprisingly strong job market in May, with annual wage growth accelerating. This data underscored the resilience of the U.S. economy.

Currently, futures markets anticipate approximately 36 basis points (bps) worth of rate cuts from the Federal Reserve this year, down from 50 bps priced in last week. The probability of an easing cycle commencing in September has also diminished. These developments come ahead of the Fed's policy decision on Wednesday, with key U.S. inflation data for May slated for release shortly beforehand. U.S. Treasury yields edged higher on Monday, reflecting a shift towards expectations of higher interest rates persisting for longer. The two-year yield (US2YT=RR) and benchmark 10-year yield (US10Y) both rose by about 1 bp to 4.8826% and 4.4414%, respectively.

French Snap Election Roils Markets

In a surprise move, French President Emmanuel Macron called for snap legislative elections later this month following a significant setback for his party in the recent European Union vote, where Marine Le Pen's far-right party emerged victorious. Macron's unexpected decision has sent shockwaves through French politics, potentially offering the far-right a genuine shot at political power and potentially weakening his presidency with three years remaining in his term. European stock futures also fell, with EUROSTOXX 50 futures FESX1! down 0.38% and FTSE futures (Z1!) dropping 0.7%. French bond futures (FOATc1) shed 0.2%.

In currency markets, The Japanese yen USDJPY depreciated 0.1% to 156.87 against the dollar. The dollar index DXY, a gauge of the greenback's strength against a basket of six major currencies, firmed to 105.10. The euro EURUSD tumbled to a one-month low following the announcement, amid heightened uncertainty regarding Europe's political landscape. It last traded 0.25% lower at $1.07735.

In commodities, Oil prices reversed earlier losses to trade higher, despite a stronger dollar. Brent crude futures BRN1! gained 0.13% to $79.72 per barrel, while U.S. West Texas Intermediate crude futures CL1! edged up 0.16% to $75.65 per barrel. GOLD rose 0.18% to $2,296.65 an ounce. Three-month copper on the LME HG1! lost 0.2% to $9,747 per metric ton, aluminium ALI1! was 1% lower to $2,552.50.

In soft commodities, the wheat contract on CBOT ZW1! lost 0.4% to $6.24-3/4 a bushel. Corn ZC1! edged 0.5% higher to $4.51 a bushel, while soybeans ZS1! traded 0.1% lower to $11.78 a bushel.

Looking ahead today, markets anticipate, Turkey Industrial Production and Unemployment Rate, Italy Industrial Production, BCB Focus Market Readout.

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General news - Information source from multiple newswires.

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

The Trade Academy Team