Global Markets Roundup: 20 Feb 2024

In the Asia-Pacific (APAC) region, stock markets experienced modest losses, with price movements subdued in the wake of the recent US holiday lull. The People's Bank of China (PBoC) made a noteworthy announcement regarding its benchmark rates. Surprisingly, the 1-year Loan Prime Rate (LPR) was kept unchanged at 3.45%, contrary to expectations of a 5 basis points cut. However, the 5-year LPR witnessed a 25 basis points reduction, deviating from the anticipated 10 basis points cut. Meanwhile, the Reserve Bank of Australia (RBA) Minutes from the February 6th Meeting revealed that the board deliberated on the possibility of either a 25 basis points hike or maintaining the current stance. The US Dollar Index (DXY) maintained a narrow trading range, while currencies (AUD and NZD) in the down under region faced downward pressure amid the cautious sentiment prevailing in Asia. The Chinese Yuan experienced a fluctuating response to the PBoC's decision.

The Australian Securities Exchange (ASX) 200 faced downward pressure, primarily attributed to the mining sector's performance. This decline followed BHP's announcement of flat underlying profits, coupled with a 20% reduction in dividends. Similarly, the Nikkei 225 retraced its earlier gains as momentum stalled, hindering its quest to surpass the 1989 record high. Investors observed a reversal in the Japanese market's trajectory as it struggled to maintain positive momentum. The Hang Seng and Shanghai Composite indices displayed a lackluster performance, with tech weakness in Hong Kong overshadowing gains in the energy sector. Meanwhile, the mainland Chinese market exhibited a range-bound behavior. Participants absorbed the news of the People's Bank of China's (PBoC) latest benchmark rates. Notably, the 1-year Loan Prime Rate (LPR) defied expectations by maintaining at 3.45%, contrary to the anticipated 5 basis points cut. However, the 5-year LPR witnessed a 25 basis points reduction, surpassing the projected 10 basis points cut. Turning to European markets, equity futures indicate a lower opening, with Euro Stoxx 50 futures down by 0.3%. This follows a 0.1% decline in the cash market on Monday, reflecting the cautious stance of investors in response to recent developments.

Foreign Exchange (FX):

- DXY (US Dollar Index) traded in a tight range between 104.28-104.41 after the holiday weekend with light catalysts.

- EUR/USD softened slightly and retested the prior day's lows near the 10-day moving average of 1.0762.

- GBP/USD was subdued ahead of appearances by several Bank of England (BoE) officials at the Treasury Select Hearing.

- USD/JPY extended gains after returning to above the 150.00 level.

Yuan and PBoC Decision:

- Yuan saw a choppy reaction to the People's Bank of China (PBoC) decision.

- PBoC set USD/CNY mid-point at 7.1068 vs expected 7.2018 (prev. 7.1032).

Down under:

- Pressure on AUD and NZD amid a cautious mood in Asia and lackluster demand for commodities.

- RBA Minutes provided brief support, mentioning the board's consideration to hike by 25bps or hold steady, with the latter deemed stronger and appropriate given balanced risks.

Commodities:

- Crude futures lacked demand following the US holiday closure and quiet energy-related newsflow.

- Tankers with Russian Sokol oil onboard started moving to ports in China and India after being stored for three months, with two tankers under US sanctions heading towards China.

- Spot gold traded rangebound, with participants awaiting clues from the FOMC (Federal Open Market Committee) minutes due mid-week.

- Copper futures were lackluster amid mostly subdued risk appetite in the region.

Looking ahead, upcoming events include the release of Canadian Consumer Price Index (CPI), the US Philly Fed Nonmanufacturing Business Outlook Survey, New Zealand Producer Price Index (PPI), Japanese Trade data, the European Central Bank's Euro Area Indicator of Negotiated Wage Rates, and the Treasury Select Hearing on the February Monetary Policy Report (MPR). Additionally, there will be supply updates from the UK and Germany.

In the corporate sphere, investors are eagerly anticipating earnings reports from companies such as Fresenius Medical Care, Antofagasta, InterContinental Hotels Group (IHG), Barclays, Carrefour, Air Liquide, Home Depot, Walmart, and Medtronic. Market participants will be closely monitoring these developments for insights into the economic landscape and potential market trends.

Commentary: The cautious start to the Asian session highlights the delicate balancing act markets face following mixed rate decisions and upcoming data releases. Investors remain wary of global economic uncertainties and geopolitical tensions, keeping risk appetite somewhat subdued. The remainder of the week will be crucial, with data and central bank actions potentially providing further clarity on the market's near-term direction.

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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