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04 Apr 2024

The Trade Academy Team

08:01 CET - 3 min read

Thursday Morning Coffee - Markets Update - 04 Apr 2024 - APAC Markets Surge as Yen Declines; Commodities Soar

Markets Update: APAC markets surged on Thursday as the prospect of US rate cuts and a weak yen boosted Japanese stocks, while commodities rallied to multi-month highs on supply concerns and global growth optimism.


by TradingView

Global Markets Roundup: 04 Apr 2024

On Thursday, Asia-Pacific (APAC) markets witnessed a robust rally, buoyed by the prospect of potential U.S. rate cuts and a weakening yen, which propelled Japanese stocks upward. Commodities experienced significant activity, with gold hitting yet another record high, oil reaching a five-month peak, and copper scaling a 13-month pinnacle. These movements spurred gains in shares of basic materials and energy companies. The surge in commodity prices can be attributed to a combination of supply disruptions, geopolitical tensions, and growing optimism regarding global growth, especially evident in the recent positive factory surveys (PMI), notably in China. "The global manufacturing output PMI moved further into expansionary territory in March, reflecting largely positive results across the major economies," analysts noted. "Global business confidence is on the mend."

While a holiday in China resulted in thinner trading conditions, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) managed to advance by 0.4%. In Tokyo, the Nikkei NI225 surged by 1.5% as the yen depreciated, with notable gains in the materials, industrials, and energy sectors. European markets showed little change in early trading, with EUROSTOXX 50 futures FESX1! and FTSE futures Z1! holding steady. Meanwhile, S&P 500 futures ES1! rose by 0.2%, and Nasdaq futures NQ1! climbed by 0.3%.

Federal Reserve Chair Jerome Powell's reassurance that U.S. rates were still likely to be reduced this year, contingent on data, further bolstered market sentiment. The case for rate cuts gained traction following a survey indicating a decline in the U.S. services sector's index of prices paid, offsetting concerns raised by a recent uptick in manufacturing data. Despite a stronger-than-expected ADP report, which indicated a rise of 184,000 jobs in the private sector, Goldman Sachs revised its forecast for payrolls upward to 240,000, signaling potential market adjustments regarding the possibility of a June rate cut. Fed fund futures reflected reduced odds of a June rate cut, dropping to 62% from 74% a month earlier. However, the significant shift lies in the magnitude and pace of expected rate cuts for the year, with around 73 basis points priced in compared to over 140 basis points in January.

Investors have also recalibrated expectations for 2025, pulling back 100 basis points of easing, now anticipating rates to end the year around 4% rather than 3%. This shift in market dynamics has pressured Treasuries, with 10-year yields US10Y hitting a four-month high of 4.429% before slightly retreating to 4.356%.

While the rise in yields generally supported the dollar, the greenback faced some downward pressure following a U.S. services survey. As a result, the euro climbed to $1.0840 EURUSD after a 0.6% overnight rally, while the dollar index stood at 104.21 DXY, having declined 0.5% the previous session. Although concerns about Japanese intervention capped the dollar at 151.60 yen USDJPY, other currencies experienced substantial gains against the yen, with the euro rising to 164.34 yen EURJPY and the Canadian dollar reaching a 16-year high at 112.31 yen CADJPY.

In commodities, a meeting of top ministers from the OPEC Countries and its allies, including Russia, maintained unchanged oil supply policies on Wednesday, urging some countries to enhance compliance with output cuts. Brent edged up by 30 cents to $89.65 a barrel on Thursday, while U.S. WTI crude CL1! rose by 30 cents to $85.73 per barrel. Gold continued its remarkable ascent, reaching a fresh record high at $2,302 an ounce GOLD, driven partly by momentum fund and commodity trading advisor (CTA) buying.

In soft commodities, the most-active corn contract CBOT ZC1! was up 0.2% at $4.32-1/2 a bushel. Wheat ZW1! rose 0.1% to $5.56-1/2 a bushel and soybeans ZS1! also was up 0.1% to $11.83 a bushel. May robusta coffee RC1! settled up $149, or 4.1%, at $3,812 a metric ton, having hit $3,838 a ton earlier, its highest since the current form of the futures contract started trading in 2008. May arabica coffee KC1! climbed 3% to $2.036 per lb. July London cocoa C2! ​was down 453 pounds, or 5.7%, to 7,439 pounds per ton after reaching a record high of 8,050 pounds on Tuesday. May raw sugar SB1! ​​traded down 0.1 cent, or 0.4%, at 22.22 cents per lb. May white sugar SF1! climed 0.6% at $647.70 a ton.

Looking ahead, today's economic calendar include:

  • Swiss CPI (Consumer Price Index)
  • EZ & UK Final Services & Composite PMI (Purchasing Managers' Index)
  • US Challenger Layoffs
  • US Initial Jobless Claims
  • Canadian Trade: Monthly data on Canada's exports and imports.
  • BoE Decision Maker Panel: A survey of UK businesses regarding their expectations for economic conditions.
  • ECB Minutes: Summary of the European Central Bank's latest monetary policy meeting.
  • Comments from Fed’s Harker, Barkin, Goolsbee, Mester & Kashkari
  • Supply from Spain, France, UK & US

You can view all markets data and charts here.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team

Rating: Mixed Outlook

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