Global markets and market news

Asian stocks on the brink due to China data,

Asian stocks began the week on a cautious note as investors brace for the release of industrial

and retail data from China while awaiting a group of Federal Reserve officials

to speak to gauge market pricing for rate cuts this year.

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US Markets

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Futures for the S&P 500 and Nasdaq declined 0.1% in early trading,

following a report released on Friday that showed US consumer confidence

fell to its lowest level in six months in May,

while long-term inflation expectations jumped to their highest level since 2011,

boosting the US dollar and treasury yields.

In emerging markets, the Turkish lira dropped to its lowest level in two months

as the weekend election appeared headed for a run-off,

while the Thai baht rose by almost 1% after the Thai opposition defeated parties aligned

with the military in weekend elections.

On Monday, the MSCI’s broadest index of Asia-Pacific shares outside Japan

(MIAPJ0000PUS) fluctuated between gains and losses,

last up 0.1%. Japan’s Nikkei index (N225) bucked the trend with a 0.5% gain,

buoyed by last week’s optimism during the earnings season.

The benchmark Chinese stocks index (CSI300) was steady in early trading, after sliding 2% last week,

while Hong Kong’s Hang Seng index (.HSI) gained 0.3% after also suffering a 2.1% hit.

The country’s central bank rolled over medium-term policy loans due on Monday,

keeping interest rates unchanged despite disappointing data

last week that fueled concerns about a global slowdown.

China is set to release monthly industrial production, retail sales,

and fixed-asset investment data on Tuesday.

Chris Weston, head of research at Pepperstone, said,

“The huge improvement on a year-on-year basis should not come as a surprise given

it’s measured against a weak economy that was in lockdown.”

Weston added, “However, with recent China data having raised some concerns

we saw import weakness, producer price index,

and loan data – China’s growth is central to market moves.”

US Markets

This week also sees several Federal Reserve officials speaking,

with Chairman Jerome Powell being appointed on Friday which could generate plenty

of headlines to move communication further.

Markets still see this as the peak for US rates and Federal funds rates at 70 basis points

in cuts by the end of the year after data on the consumer price index and

producer price index last week supported the Fed’s temporary pause

in rate hikes due to inflation slowdown.

Federal Reserve Bank of Boston President Eric Rosengren said on Friday

that the US central bank might need to raise interest rates further if inflation remains high.

Joseph Capurso, head of international economics at the Commonwealth Bank of Australia,

believes continued inflation in the US will impact pricing on the near-term cuts

on the fund’s rate and contribute to the US dollar’s recovery in the coming months.

The US dollar hovered around a five-week high against major currencies on Monday,

extending its best weekly gain since September from the previous week.

It was last trading at 102.64, after rising 1.4% last week on global growth concerns.

There was a lot on investors’ minds with uncertainty surrounding the US debt ceiling and

the return of banking concerns. US President Joe Biden is expected to meet with

congressional leaders on Tuesday to hold talks on raising

the country’s debt limit and avoid a catastrophic default.

Fears of the US Congress not raising the debt ceiling on time led to significant distortions

at the short end of the yield curve as investors avoid maturing debt

when the Treasury runs the risk of running out of money

and flock to alternative issuances.

The yield on the 10-year benchmark bonds has only slightly changed at 3.4588% after

increasing by 6 basis points on Friday,

while the 2-year yields dropped by 2 basis points to 3.9830% after

also jumping by 10 basis points in the previous session.

Oil prices have declined for the fourth consecutive session.

US crude futures fell by 0.5% to $69.71 per barrel,

while Brent crude futures dropped by 0.6% to $73.74 per barrel.

Gold prices rose by 0.2% to reach $2,014.95 per ounce.

article name Global markets and market news

Global markets and market news

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