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26 Mar 2024

The Trade Academy Team

07:49 CET - 3 min read

Tuesday Morning Coffee - Markets Update - 26 Mar 2024 - APAC Equities Navigate Rate Uncertainty; Yuan's Stability Tested

Markets Update: APAC 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.


by TradingView

Global Markets Roundup: 26 March 2024

APAC equities made modest gains on Tuesday, albeit failing to breach this month's highs, as conflicting signals from U.S. Federal Reserve officials injected uncertainty into the timing of potential interest rate adjustments. Mixed messages regarding potential rate cuts from key Fed policymakers fueled hesitancy among investors, dampening market enthusiasm despite positive momentum.

Concerns over Japan's potential intervention to stabilize the yen added further pressure on market sentiment, particularly impacting the dollar-yen exchange rate, albeit minimally. Speculation surrounding China's stance on its currency further contributed to market jitters, with the yuan exhibiting some volatility. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged up by 0.6%, with notable gains observed in South Korean chipmakers such as SK Hynix 000660 and Samsung Electronics 005930, propelling the Kospi KOSPI up by 1.2%. Meanwhile, Japan's Nikkei NI225 remained relatively steady, accompanied by a stable performance of the yen against the dollar at 151.31. Federal Reserve policymakers' diverging viewpoints have introduced unpredictability into the policy landscape, with investors eagerly awaiting forthcoming U.S. inflation indicators, scheduled for release during the upcoming Good Friday holiday closure. Chicago Fed President Austan Goolsbee's projection of three rate cuts this year contradicted the cautious stance advocated by Fed Governor Lisa Cook and Atlanta Fed President Raphael Bostic, who scaled back rate cut expectations. In Europe the pre-market EURO STOXX 50 Futures point to flat opening.

In the currency markets on Tuesday, we witnessed a series of notable movements. The New Zealand dollar (NZDUSD) staged a recovery from its recent slump, bouncing back from a four-month low to reach a level of $0.5999 against the US dollar. Similarly, the British pound (GBPUSD) strengthened, reaching $1.2636, marking a significant improvement from last week's dip to $1.25755. Meanwhile, the Australian dollar (AUDUSD) stabilized at $0.6540. The performance of the US dollar was mixed, as reflected by the dollar index (DXY), which edged marginally lower to 104.20, down 0.02%. Conversely, the euro (EURUSD) saw a modest increase of 0.03% to $1.0840. In the Japanese market, the US dollar (USDJPY) experienced a slight decline of 0.04% against the yen, settling at 151.37. This movement was attributed to significant resistance encountered near the 152 level, largely due to concerns about potential intervention by Japanese authorities. Elsewhere, the offshore yuan (USDCNH) strengthened by nearly 0.1%, reaching 7.2487 per dollar. This uptick followed suspected selling of dollars by China's state-owned banks and strong official guidance from the central bank, which bolstered the currency in the onshore market.

On Tuesday, the energy market saw a modest uptick as Brent crude futures for May (BRN1!) inched up by 7 cents to settle at $86.82 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude futures (CL1!) rose by 6 cents, reaching $82.01 per barrel at 0541 GMT.

Meanwhile, the gold market remained stable around $2,170 per ounce, maintaining a narrow sideways trend. Investors exercised caution as they awaited the release of the latest US PCE price index report, which serves as the Federal Reserve's key metric for measuring inflation.

In metals trading, three-month copper on the London Metal Exchange (HG1!) experienced a slight decline of 0.4%, settling at $8,834 per metric ton by 0448 GMT. Earlier in the session, the contract had dipped by as much as 0.7% to $8,810, marking its lowest level since March 13.

Turning to agricultural commodities, the most-active wheat contract on the Chicago Board of Trade (CBOT) (ZW1!) saw a modest increase of 0.2%, reaching $5.56 per bushel by 0113 GMT, following a peak of $5.67 on Monday, its highest level since March 4. In contrast, CBOT soybeans (ZS1!) experienced a slight decline of 0.5%, settling at $12.03-3/4 per bushel, while corn futures (ZC1!) fell by 0.2% to $4.36-3/4 per bushel. Shifting focus to the coffee market, May arabica coffee (KCK24) closed up +0.80 (+0.43%) on Monday, whereas May ICE robusta coffee (RMK24) posted a gain of +59 (+1.76%). This recovery in coffee prices was attributed to a rebound from early losses, driven by weakness in the dollar (DXY), which prompted short-covering in coffee futures. Finally, in cocoa trading, May ICE NY cocoa (CCK24) closed up +710 (+7.94%) on Monday, with May ICE London cocoa #7 (CAK24) also posting gains of +732 (+9.81%).

Looking ahead today, marx ket participants are bracing for key events, including German Gfk Consumer Confidence, US Durable Goods Orders, CB Consumer Confidence, Dallas Fed Services.

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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