13 MAY 2024

The Trade Academy Team

07:30 CET - 3 min read

Monday Morning Coffee - Markets Update - 13 May 2024 -APAC Stocks Reach 15-Month Highs Amidst Looming US Inflation Concerns

Markets Update: Asia-Pacific stocks cautiously advanced despite anxieties over US inflation data and potential tariff hikes, while global markets braced for a data-heavy week that could influence central bank decisions and commodity prices.

ECONOMIC CALENDAR

by TradingView

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Global Markets Roundup: 13 MAY 2024

On Monday, Asia-Pacific (APAC) shares cautiously ascended to 15-month peaks, navigating a week fraught with the potential impact of inflation data on prospects for earlier U.S. interest rate adjustments. Concurrently, forthcoming Chinese economic indicators are poised to scrutinize the buoyancy of the world's second-largest economy's recovery.

In a reassuring turn, Beijing recently disclosed a modest uptick in inflation, reaching an annual 0.3% in April, assuaging apprehensions regarding protracted deflationary trends. Market forecasts anticipate further momentum in April's retail sales and industrial output, scheduled for release later this week. To fuel domestic stimulus initiatives, Chinese authorities are preparing to issue 1 trillion yuan ($138.24 billion) in longer-dated bonds, bolstering market sentiment. This favorable outlook has propelled Chinese blue-chip stocks to a seven-month pinnacle, although a minor 0.1% softening was observed on Monday, attributed partly to speculation surrounding the imminent release of new tariffs on Chinese imports by the White House. Meanwhile, MSCI's broadest index of Asia-Pacific shares outside Japan exhibited a modest 0.2% uptick, extending its three-week rally streak. Conversely, Japan's Nikkei NI225 remained stagnant, shadowed by conjectures over potential yen depreciation and its subsequent impact on the Bank of Japan's monetary policy. The Bank of Japan sent a hawkish signal to markets on Monday by reducing the volume of Japanese government bonds offered in a routine operation, prompting yields to ascend.

Futures contracts for the EUROSTOXX 50 FESX1! remained steady, while FTSE Z1! futures experienced a marginal 0.2% dip. S&P 500 and Nasdaq futures exhibited minimal fluctuations on Monday following last week's rally, buoyed by robust corporate earnings. With 80% of S&P 500 companies having reported earnings, a notable 7.8% increase is anticipated, surpassing April's forecast of 5.1%. Anticipation is particularly high for Nvidia's forthcoming earnings report on May 22, with quarterly earnings expected to surge by 49%, according to Tajinder Dhillon, senior research analyst at LSEG.

Internationally, the trajectory of the U.S. April inflation report assumes paramount importance following three consecutive months of upside surprises. Median projections suggest a 0.3% uptick in core consumer prices for the month, compared to March's 0.4%, potentially moderating the annual rate to 3.6%. Given the significance of these figures, even minor deviations could trigger significant market reactions. nA tepid inflation reading could bolster expectations of imminent Federal Reserve easing, currently estimated at a mere 25% likelihood for July. Conversely, an elevated inflation figure might postpone rate adjustments beyond September, challenging prevailing forecasts for a 42 basis point easing this year.

In currencies, the USDJPY was trading around 155.92, while the EURUSD was trading unchanged around $1.0770. The dollar index DXY edged up to 105.327. The offshore yuan USDCNH was trading lower at 7.238 per dollar, while the spot yuan USDCNY was trading higher around 7.2338. The NZDUSD fell 0.2% to $0.6009, while the AUDUSD traded below $0.66.

In commodities, oil prices receded towards the end of last week amid rising U.S. gasoline and distillate inventories ahead of the summer driving season. Brent crude BRN1! dipped 22 cents to $82.57 a barrel, while U.S. crude CL1! slid 17 cents to $78.09 per barrel. GOLD prices experienced a marginal decline to $2,358 an ounce after registering a 2.5% uptick last week, driven by momentum funds and reports of sustained Chinese buying. Spot silver XAGUSD1! was trading 0.4% lower to $28.03 per ounce, platinum PL1! edgeg 0.1% lower to $992.89 and palladium XPDUSD1! was trading flat at $978.03. Three-month copper on the LME HG1! was trading 0.6% higher at $10,060 per metric ton, while the most-traded June copper contract on the SHFE HG1! was 1% higher at 81,050 yuan ($11,204.19) a ton.

In agricultural commodities, the most-active wheat contract on the CBOT ZW1! fell 1% to $6.56-3/4 a bushel, while CBOT soybeans ZS1! was trading 0.3% down at $12.15-3/4 a bushel and corn ZC1! lost 0.6% to $4.67 a bushel.

Looking ahead this week, economic data due for release includes U.S. producer prices, retail sales, and jobless claims, alongside final reports on European inflation, reinforcing expectations for a June rate cut by the European Central Bank. Throughout the week, a plethora of Federal Reserve officials are scheduled to provide insights into their policy stances, culminating in Fed Chair Jerome Powell's appearance alongside the head of the Dutch central bank on Tuesday.

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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