25 MAR 2024

The Trade Academy Team

07:20 CET - 3 min read

Monday Morning Coffee - Markets Update - 25 Mar 2024 - Asian Markets Tread Water Amidst Inflation Concerns and Currency Caution from Japan

Markets Update: Asian markets were cautious ahead of US inflation data this week, with the PCE price index being the highlight, while European equities were buoyed by expectations of declining borrowing costs.

ECONOMIC CALENDAR

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Global Markets Roundup: 25 MAR 2024

Asian markets exhibited hesitancy today as investors remained cautious ahead of crucial U.S. inflation data scheduled for later this week, fearing its potential impact on interest rates. Furthermore, apprehensions surrounding possible currency intervention by Japan halted the yen's recent decline, at least temporarily. The People's Bank of China orchestrated an upswing in the yuan by setting a stronger fix for the currency, consequently nudging the dollar downwards across the board.

The highlight of the upcoming week is anticipated to be the release of the U.S. core personal consumption expenditure (PCE) price index on Friday. Analysts predict a 0.3% increase in February, maintaining the annual pace at 2.8%. Any deviation from these figures could be interpreted as a setback to expectations for a Federal Reserve rate cut in June. With many markets observing closures for the Easter holiday on Friday, the full impact of the PCE data may not be felt until the following week. Last week, Federal Reserve Chair Jerome Powell's dovish tone prompted futures to imply a 74% likelihood of a June easing, up from 55% the week before. Powell is slated to engage in a moderated discussion at a policy conference on Friday, alongside Fed governors Lisa Cook and Christopher Waller, who also have appearances scheduled this week.

In Europe, attention is focused on inflation indicators, with consumer price data set to be released from France, Italy, Belgium, and Spain, preceding the overall EU CPI report on April 3. The anticipation of declining borrowing costs globally has buoyed equities, with the S&P 500 already up nearly 10% for the year. Futures for the S&P 500 and Nasdaq traded with little change on Monday, while EURO STOXX 50 futures inched up by 0.1%, and FTSE futures remained relatively stagnant. The MSCI's broadest index of Asia-Pacific shares, excluding Japan, maintained a flat trajectory, hovering just below eight-month highs. Japan's Nikkei 225 experienced a 0.6% decline, following a notable 5.6% surge last week to reach a fresh all-time peak amidst yen depreciation.

On Monday, In currency markets, the yen's value against the dollar stood at 151.25, a slight recovery from its recent dip to a four-month low of 151.86 recorded last week. This puts the yen in close proximity to its lowest level in 32 years, near 152 per dollar, a milestone reached back in 2022. The yen's performance has exerted pressure on other major currencies, with the EURUSD slipping by 0.03% to $1.08045, hovering near a three-week low. Meanwhile, the pound sterling saw a marginal decrease of 0.02% against the dollar, settling at $1.25985. Last week, the pound experienced a decline of over 1% in response to the Bank of England's dovish signals. Furthermore, reports from the Financial Times on Friday indicated Governor Andrew Bailey's acknowledgment of the potential for rate cuts this year, further contributing to the pound's downward trajectory. The dollar index (DXY), which measures the dollar's strength against a basket of major currencies, recorded a modest increase of 0.03% to reach 104.46. This follows a notable weekly gain of almost 1% in the previous week. Elsewhere in the currency market, the Australian dollar dipped by 0.05% to $0.65115, while the New Zealand dollar experienced a more significant decline of 0.13%, settling at $0.5987 against the US dollar.

In commodities, Oil prices found support amidst Ukraine's attacks on Russian refineries, coupled with a decline in U.S. rig counts. Brent rose by 46 cents to $85.89 a barrel, while U.S. crude firmed by 48 cents to $81.11 per barrel. Gold showed signs of a rebound, edging higher to $2,174 an ounce after reaching a record peak of $2,217.79 last week. Three-month copper LME HG1! rose 0.5% to $8,912 a metric ton, while the most-traded May copper contract on the SHFE HG1! was flat at 72,520 yuan ($10,068.73) a ton. In soft commodities, the most-active wheat contract on the CBOT ZW1! was up 0.4% at $5.56-3/4 a bushel after touching $5.60 in early trade. In other crops, CBOT soybeans ZS1! were down 0.2% at $11.90-3/4 a bushel and corn ZC1! fell 0.2% to $4.38-1/2 a bushel.

Looking ahead this week:

Key Points

• Global Focus: This week has economic data releases from many major economies, including the US, UK, Eurozone, Australia, Japan, Canada, and South Africa.
  
• Central Bank Activity: Central bank decisions from the Riksbank (Sweden) and the SARB (South Africa) could impact their respective currencies.
  
• Inflation Data: CPI updates from Australia, Spain, France, and Japan will be closely watched to gauge inflationary pressures.
  
• Key US Data: US Building Permits, US Durable Goods Orders, and the final US GDP revision for Q4 hold significant interest for markets.
  

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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