Global Markets Roundup: 05 June 2024

Asia-Pacific stocks advanced on Wednesday, while the U.S. dollar remained steady amid expectations of an interest rate cut by the Federal Reserve in September, spurred by signs of a weakening U.S. labor market ahead of a crucial payroll report this week.

Concerns about a cooling U.S. economy tempered risk appetite, while attention in Asia turned to India's markets following a decline in stocks and a depreciation of the rupee on Tuesday. This came after election results revealed a narrower-than-expected victory margin for Prime Minister Narendra Modi.

The MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) climbed 0.24%, while Japan's Nikkei 225 (NI225) fell 1% as the Japanese yen (USDJPY) reached two-week highs. Chinese stocks showed mixed results, with the blue-chip CSI 300 index (CSI300) largely unchanged in early trading, while Hong Kong's Hang Seng index (HSI) gained 1%. A private sector survey indicated that China's services activity in May accelerated at its fastest pace in 10 months, with staffing levels expanding for the first time since January, suggesting sustained recovery in the second quarter.

Overnight data revealed that U.S. job openings in April fell more than expected to their lowest level in over three years, indicating softening labor market conditions. This data strengthened expectations of rate cuts this year, with markets pricing in a 45 basis point easing. Traders are now predicting a 65% chance of a rate cut in September, up from 46% a week earlier, according to the CME FedWatch tool.

Benchmark 10-year U.S. Treasury yields (US10Y) stood at 4.3376% during Asian hours, after hitting a nearly three-week low of 4.314% on Tuesday following the jobs data.

Meanwhile, futures indicated a subdued open for India's Nifty 50 index NIFTY after it slid nearly 6% on Tuesday, marking its worst session in four years, with foreign investors offloading approximately $1.5 billion worth of shares. Modi's ruling Bharatiya Janata Party lost its standalone majority in parliament for the first time in a decade, now reliant on regional allies to surpass the halfway mark required to govern the world's largest democracy. This has raised uncertainties over economic policies, including the push for investment-led growth, a cornerstone of Modi's administration.

In currencies, the dollar index DXY, was trading steady at 104.14. Forex strategists polled by Reuters generally agreed that the dollar was overvalued and predicted minor weakness over the next 12 months. The USDJPY was trading high at 155.48 on Wednesday morning. The USDCHF edged higher at 0.8902, The EURUSD was trading at $1.0878 and GBPUSD was hovering around $1.2770. The AUDUSD traded slightly lower at $0.6443, The NZDUSD traded around $0.6173, while the USDCAD traded at C$1.3678 per dollar.

In commodities, oil prices extended losses slightly from the previous session in early Asian trading due to growing concerns about demand following an industry report indicating increases in U.S. crude and fuel stockpiles. Brent crude futures (BRN1!) eased 0.1% to $77.47 per barrel, while U.S. West Texas Intermediate crude futures (CL1!) fell 0.12% to $73.16 per barrel. GOLD rose 0.09% to $2,330 per ounce. Three-month copper on the LME HG1! lost 0.1% to $9,937.50 per metric ton, LME aluminium ALI1! fell 0.8% to $2,643 a ton, nickel NICKEL1! dropped 0.6% to $18,950, zinc ZNC1! was 0.5% lower to $2,919.50, tin FTIN1! traded 0.2% down to 3$31,880, while lead LEAD1! was flat at $2,242.50.

In soft commodities, The most active wheat contract on the CBOT ZW1! was 0.5% higher at $6.61-1/4 a bushel. Soybeans ZS1! edged 0.8% higher to $11.88-3/4 a bushel, and corn ZC1! climbed 0.1% to $4.42-3/4 a bushel. July robusta coffee RC1! was 1.4% up, at $4,332 a metric ton. July arabica coffee KC1! climbed 3.2% at $2.339 per lb. September London cocoa C2! ​was 0.3% lower, to 7,068 pounds per ton. July New York cocoa CC1! fell 2.2% to $9,557 a ton. July raw sugar SB1! ​​was 0.4% higher, at 18.86 cents per lb. August white sugar SF1! climbed 0.6% at $555.80 a ton.

Looking ahead today, markets anticipate:

Data Releases:

• Purchasing Managers' Indices (PMIs): Flash readings for the Eurozone (EZ), United Kingdom (UK), Canada, and the United States (US) will be released, providing insights into current business activity in these regions.
  
• US ADP National Employment Report: This report will shed light on the US labor market by indicating private sector employment growth for the previous month.
  
• US ISM Non-Manufacturing PMI: This survey measures activity in the US services sector, offering a gauge of economic health.
  

Central Bank Announcements:

• Bank of Canada (BoC) Policy Announcement: The BoC will be making a policy announcement, potentially including any adjustments to interest rates.
  
• Speeches: We can expect speeches from Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers, which may provide clues about the Bank's future monetary policy stance.
  

Other:

• Supply Chain Updates: Information on supply chain conditions from the UK and Germany may be available.
  

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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