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Markets Update: APAC Stocks Rangebound, DXY Softens, Crude Subdued, European Futures Signal Higher Open.
Economic Calendar
Global Markets Roundup: 01 Dec 2023
Asia-Pacific stocks began the new month with price action rangebound as markets paused following the November rally. Investors digested a busy day of economic releases and remained cautious amid the ongoing conflict in Gaza. Crude futures remained subdued after the prior day's selling despite the OPEC+ agreement for deeper production cuts. Markets were underwhelmed as the output cuts are voluntary, raising questions about the discipline of individual producers.
The Australian ASX 200 index closed lower on Friday, dragged down by underperformance in the technology and consumer-related sectors as yields edged higher. The Japanese Nikkei 225 index traded indecisively, with encouraging data releases offsetting the headwinds from early currency strength. The Hong Kong Hang Seng index and the Chinese Shanghai Composite index were gradually pressured following the People's Bank of China's (PBoC) substantial net liquidity drain. However, the Shanghai Composite index eventually moved into positive territory amid reports that China's state-owned capital operating company reportedly bought ETFs on Friday. The session also saw a surprise return to expansion territory for the Chinese Caixin Manufacturing PMI. European equity futures are indicative of a higher open, with the Euro Stoxx 50 future up 0.4%. This follows a 0.3% gain in the cash market yesterday.
FX The US Dollar Index (DXY) marginally softened beneath 103.50, retracing some of the previous day's gains sparked by hawkish comments from Fed's Daly. Investors await key data releases and Fed speakers ahead of the blackout period. EUR/USD partially recouped its prior day's losses triggered by CPI data, just about reclaiming the 1.0900 level. GBP/USD regained some ground after its recent failure to hold onto the 1.2700 handle. USD/JPY briefly dipped below the 148.00 level, with Japan's currency supported by a fall in unemployment and the largest trade union's formal agreement to accept pay increase demands of at least 5% for next year. However, these moves gradually faded. AUD and NZD traded choppily amid mixed risk appetite and following yesterday's oil-related pressure due to underwhelming OPEC+ voluntary output cuts. A surprise expansion in Chinese Caixin Manufacturing PMI provided temporary support. The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.1104 vs exp. 7.1458 (prev. 7.1018).
FIXED INCOME 10-year UST futures marginally rebounded after yesterday's month-end profit-taking, but the recovery lacked strength amid recent hawkish Fed commentary and a slip below 110.00. Bund futures traded rangebound but moved away from the previous day's lows, finding support around the 132.00 level. 10-year JGB futures were subdued despite encouraging data and the absence of additional BoJ purchases. The formal agreement for Japan's largest trade union regarding a pay hike of at least 5% next year could play a key role when the BoJ decides to exit easy policy.
COMMODITIES
Crude 0il futures remained subdued after the previous day's selling despite the OPEC+ agreement for deeper production cuts. Markets were unimpressed as output cuts are voluntary, raising concerns about the discipline of individual producers.
The OPEC Secretariat announced that several OPEC+ countries will make additional voluntary cuts totaling 2.2mln BPD (exp. 2.0mln). Brazil is confirmed to join OPEC+ from January 2024.
Saudi Arabia will extend its voluntary cut of 1mln BPD to the end of Q1 2024, with its production to be approximately 9mln BPD. Russia will also extend its voluntary cut in oil supplies until the end of Q1 2024, with its voluntary supply cut reaching 500k BPD. Kuwait will make a further 135k BPD OPEC+ oil output cut, while the UAE will make an additional 160k BPD OPEC+ output cut. Iraq is reportedly cutting its production by 220k BPD in Q1. Conversely, Angola rejected its OPEC quota of 1.11mln BPD and announced it will produce 1.18mln BPD, according to Bloomberg.
Spot gold traded sideways near USD 2,040/oz as indecision persisted after the mostly inline PCE price data.
Copper futures ultimately closed flat, with price action hampered by the uninspired risk sentiment across Asia-Pac.
Looking ahead, key highlights include the release of EZ, US, and Canadian Manufacturing PMI (Final) data, UK Nationwide House Prices, French Budget Balance, Italian GDP (Final), and Canadian Unemployment Rate. Additionally, speeches from Fed officials Powell, Barr, Goolsbee, and Cook, and ECB officials Elderson and Lagarde, are scheduled.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team