18 MAR 2024

The Trade Academy Team

06:26 CET - 3 min read

Monday Morning Coffee - Markets Update - 18 Mar 2024 - APAC Markets Rally as BOJ Meeting Looms; China's Economic Data Boosts Sentiment

Markets Update: The developments in monetary and fiscal policy underscore the cautious sentiment prevailing in the currency markets, with investors closely monitoring central bank decisions and economic indicators for potential shifts in exchange rates and market dynamics.

ECONOMIC CALENDAR

by TradingView

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Global Markets Roundup: 18 MAR 2024

Amidst anticipation surrounding the Bank of Japan's (BOJ) forthcoming meeting, the Nikkei 225 index spearheaded a surge in Asia-Pacific markets on Monday. Concurrently, Chinese equities maintained their upward trajectory following the release of robust economic indicators indicating a strong start to the year.

In Tokyo, the Nikkei 225 recorded a notable gain of 2.2%, accompanied by a 1.6% climb in the Topix index. Market sentiment remained buoyant as investors awaited the BOJ's decision, with expectations leaning towards an exit from the current negative interest rate policy, potentially elevating the benchmark rate to 0% from its current -0.1%. Elsewhere in Asia, the Reserve Bank of Australia is poised to maintain its cash rate at 4.35% following its meeting on Tuesday, mirroring the anticipated stability in the U.S. Federal Reserve's benchmark interest rates, expected to remain within the range of 5.25% to 5.5%. Chinese markets rallied on the back of encouraging economic data. Retail sales and industrial production figures for the initial two months of the year surpassed analysts' projections, with retail sales up by 5.5% and industrial production posting a 7% increase. Additionally, the unemployment rate for urban areas stood at 5.3% in February, underscoring the resilience of China's economic landscape. In light of the positive data, the CSI 300 index in China ascended by 0.49%, reflecting growing confidence among investors. However, in Hong Kong, the Hang Seng index initially experienced minor setbacks, opening 0.3% lower before gradually converging towards stability near the flatline.

Meanwhile, in the United States, concerns regarding inflation persisted, exerting downward pressure on equities ahead of the Federal Reserve's policy meeting. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all registered declines on Friday, highlighting the prevailing apprehension within the market.

European equity markets concluded the trading session with a downturn for the second consecutive day on Friday. The decline was attributed to apprehensions surrounding persistent inflationary pressures in the United States, coupled with speculation regarding a potential postponement of a rate cut by the Federal Reserve. Such deliberations have raised concerns among investors about the reverberating effects on other central banks worldwide.

In the futures market, EUROSTOXX 50 futures (FESX1!) and FTSE futures (Z1!) remained relatively stable. However, S&P 500 futures (ES1!) edged up by 0.1%, and Nasdaq futures (NQ1!) by 0.2%, as anticipation grew ahead of the Federal Reserve's policy meeting scheduled for Tuesday and Wednesday.

On Monday, the DXY dollar index demonstrated stability, hovering around the mark of 103.5. Investors maintained a watchful stance in anticipation of the forthcoming policy decision by the Federal Reserve, scheduled for later this week. Market consensus suggests the Fed will opt to maintain the status quo by keeping the benchmark interest rates unchanged. The yen faced downward pressure last week, as the dollar strengthened to 149.20 yen USDJPY. The performance of major currency pairs exhibited marginal fluctuations in the foreign exchange markets. The euro (EURUSD) experienced a slight decline of 0.04%, reaching a value of $1.0883. Similarly, the sterling (GBPUSD) was observed trading at $1.2729, marking a decrease of 0.08% for the day. These movements precede the impending Bank of England meeting scheduled for Thursday, during which analysts anticipate the central bank to maintain interest rates at their current levels.

Meanwhile, the Australian dollar (AUDUSD) remained relatively stable, with minor variations as it hovered around $0.6560, lingering close to a low point recorded over a week ago. Notably, the Aussie has demonstrated a modest increase of approximately 1% since the onset of March. Conversely, the New Zealand dollar (NZDUSD) displayed a slight upward trend, edging marginally higher to $0.60855.

Given the recent string of uncomfortably high inflation readings, bonds sought support. Two-year Treasury yields (US2YT=RR) rose to 4.73%, marking a 24 basis points increase from the previous week, while 10-year yields (US10Y) stood at 4.301%.

Oil prices witnessed an upward trend following the International Energy Agency's upward revision of its 2024 oil demand outlook. However, uncertainty loomed over the supply landscape due to Ukrainian strikes on Russian oil refineries. Brent crude (BRN1!) rose by 22 cents to $85.56 a barrel, while U.S. crude (CL1!) increased by 25 cents to $81.29 per barrel.

The rally in the dollar and yields dampened the appeal of gold, which hovered at $2,153 per ounce GOLD, reflecting a 1% decline from the prior week and distancing itself from record highs. Spot platinum (PL1!) exhibited a slight decline of 0.1%, settling at $932.45 per ounce, while palladium (XPDUSD1!) remained stable at $1,077.25. Concurrently, silver (XAGUSD1!) experienced a modest dip of 0.61%, reaching $25.01 per ounce. Market analysts anticipate a forthcoming policy decision this week, with expectations leaning towards the maintenance of unchanged benchmark interest rates.

On Monday, copper prices displayed a varied performance, characterized by a slight decline in the London contract juxtaposed against a historic surge in Shanghai rates. This discrepancy was driven by a confluence of factors, notably supply constraints counterbalancing uncertainties surrounding demand forecasts. The three-month copper futures on the London Metal Exchange (LME) experienced a marginal downturn of 0.3%, settling at $9,043.50 per metric ton as of 0409 GMT. Conversely, the leading May copper contract on the Shanghai Futures Exchange witnessed a notable uptick of 0.8%, reaching an unprecedented high of 72,980 yuan ($10,139.91) per ton.

On Monday, soft commodities market saw contrasting movements in the coffee sector, with May arabica coffee (KCK24) closing down by 0.49%, shedding 0.90 points, while ICE robusta coffee (RMK24) experienced an uptick, closing up by 0.95% or 31 points. In the wheat sector, the most-active contract on the Chicago Board of Trade (CBOT), ZW1!, exhibited a positive trend, rising by 0.9% to reach $5.33-1/4 per bushel as of 0251 GMT. Despite this recent increase, the contract had faced a decline of 1.7% the previous week, hovering close to its lowest level in three-and-a-half years.

Looking in the week ahead, market participants will closely monitor the outcomes of key central bank meetings and continue to assess economic data releases for further insights into global market dynamics.

Monday, March 18th

• China: Retail Sales (Feb)
  
• Eurozone: Final CPI (Feb)
  

Tuesday, March 19th

• Japan: Bank of Japan (BoJ) Interest Rate Announcement
  
• Australia: Reserve Bank of Australia (RBA) Interest Rate Announcement
  
• Germany: ZEW Economic Sentiment Survey (Mar)
  
• Canada: Consumer Price Index (CPI) (Feb)
  

Wednesday, March 20th

• US: Federal Open Market Committee (FOMC) Interest Rate Announcement
  
• China: People's Bank of China (PBoC) Loan Prime Rate (LPR) Announcement
  
• Brazil: Central Bank of Brazil (BCB) Interest Rate Announcement
  
• Czech Republic: Czech National Bank (CNB) Interest Rate Announcement
  
• Ireland: Bank of Ireland (BoI) Interest Rate Announcement
  
• Japan: Market Holiday (Vernal Equinox Day)
  
• UK: Consumer Price Index (CPI) (Feb)
  
• New Zealand: Gross Domestic Product (GDP) (Q4)
  

Thursday, March 21st

• UK: Bank of England (BoE) Interest Rate Announcement
  
• Switzerland: Swiss National Bank (SNB) Interest Rate Announcement
  
• Norway: Norges Bank Interest Rate Announcement
  
• Turkey: Central Bank of the Republic of Turkey (CBRT) Interest Rate Announcement
  
• European Union: European Council Meeting
  
• Eurozone/UK/US: Flash Purchasing Managers' Index (PMI) (Mar)
  
• US: Philadelphia Fed Manufacturing Index (Mar)
  
• New Zealand: Trade Balance (Feb)
  
• Japan: Consumer Price Index (CPI) (Feb)
  

Friday, March 22nd

• Japan: Rengo (Labour Union) 2nd Pay Tally
  
• Russia: Central Bank of Russia (CBR) Interest Rate Announcement
  
• European Union: European Council Meeting
  
• Australia: Jobs Report (Feb)
  
• UK: Retail Sales (Feb)
  
• Germany: Ifo Business Climate Survey (Mar)
  

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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