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Markets update: APAC stocks dipped slightly on Friday as hopes for swift U.S. rate cuts faded after Federal Reserve officials signaled a more cautious approach despite signs of easing inflation, with the Japanese yen weakening and European equities gaining ground against the dollar.
Economic Calendar
Global Markets Roundup: 17 May 2024
APAC equities experienced a marginal downturn on Friday as investors grappled with uncertainties surrounding the future trajectory of U.S. monetary policy. This hesitation arose following indications from Federal Reserve officials suggesting a potential extension of higher interest rates, notwithstanding initial indications of abating inflation.
Earlier this week, a report revealing a moderation in U.S. consumer price inflation led markets to swiftly anticipate at least two rate cuts within the year. However, this optimism waned as subsequent labor market data underscored persistent tightness, accompanied by cautious sentiments from central bankers regarding inflationary trends. Market expectations now factor in a projection of 47 basis points of easing by the Federal Reserve this year, with a full rate cut priced in for November, according to the FEDWATCH gauge.
The MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) retraced by 0.14% after attaining a two-year pinnacle on Thursday, yet still poised for a weekly gain of 2.6%, marking its fourth consecutive week of advances. Japan's Nikkei NI225 observed a decline of 0.48%, contrasting with China's equities, which exhibited a modest uptick. The blue-chip gauge 3399300 edged up by 0.15% in early trading. Hong Kong's Hang Seng Index HSI stood out in the Asian landscape, rising by 0.77% and reaching its zenith since August 2023.
Despite positive signals from this week's data, Federal Reserve policymakers have refrained from openly revising their perspectives regarding the timing of anticipated rate cuts, which investors widely anticipate commencing this year. Federal Reserve Bank of New York President John Williams emphasized the current monetary policy stance as "restrictive" and "in a good place," indicating a reluctance to adjust policy based on current indicators. Amidst these developments, the U.S. equity market experienced an upswing, with the Dow DJI reaching highs of 40,051.05 and both the S&P 500 SPX and Nasdaq IXIC hitting record levels before concluding marginally lower for the day.
The Japanese currency has depreciated roughly 9.5% this year, attributed to the Bank of Japan's loose monetary policy juxtaposed with higher U.S. interest rates, attracting capital flows toward U.S. assets. Concerns over the yen's depreciation prompted suspicions of intervention by Japanese authorities in late April and early May, aiming to stabilize the currency after reaching lows unseen in over three decades. The Bank of Japan maintained its bond purchasing operations unchanged on Friday following an unexpected reduction earlier in the week, reflecting ongoing efforts to manage bond market dynamics.
In currency markets, the dollar faced its most substantial weekly decline against the euro in over two months, with the EURUSD up approximately 1%, settling at $1.08595. The USDJPY weakened by 0.23% to 155.80 in early trading, retracting some gains accrued after the modest U.S. CPI report earlier in the week. Sterling GBPUSD is trading higher to $1.2664. AUDUSD was trading lower at $0.6675. The NZDUSD was trading at $0.6120.
In commodities, oil prices witnessed an uptick in Asian trading sessions, with global benchmark Brent poised for its first weekly gain in three weeks, buoyed by signs of improving global demand and moderating inflation in the United States. U.S. crude CL1! remained relatively stable at $79.18 a barrel, while Brent edged 0.1% higher to $83.35 BRN1! per barrel. GOLD prices held steady at $2,377.25 per ounce.
In agricultural commodities, the most-active wheat contract on the CBOT ZW1! was 0.3% higher $6.65-1/2 a bushel. Soybeans ZS1! edged 0.7% to $12.24-3/4 a bushel, while corn ZC1! climbed 0.4% at $4.59 a bushel. July robusta coffee RC2! jumped 0.5% to $3,420 a ton. July arabica coffee KC2! lost 0.8% to $1.979 per lb. July London cocoa C1! traded 5% down to 6,229 pounds per ton. July New York cocoa CC1! was 5.7% down to $7,393 a ton. July raw sugar SB1! edged 1.7% lower at 18.33 cents per lb. August white sugar SF1! lost 1.1% to $536.20 a metric ton.
Looking ahead today, we have reports on data, EU Inflation Rate, CAD New Housing Price Index, Russia Inflation Rate.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team