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Global equity/currency market update: Asian Stocks Steady Amid European Political Uncertainty, US Fed Decision Awaited

11 Jun 2024 8:56 am
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Mumbai, 11 Jun (Commoditiescontrol): Asian stocks traded within a narrow range on Tuesday as investors considered the impact of fresh political uncertainty in Europe. Right-wing gains in elections and a snap poll in France have reignited concerns about the cohesion of the European bloc. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.4% in thin trade, with Chinese blue chips down 0.7%. In contrast, Japan's Nikkei rose 0.3%, and South Korean stocks climbed 0.5%.

EUROSTOXX 50 futures edged up 0.2%, stabilizing after Monday's decline, while FTSE futures rose 0.1%. The euro, French stocks, and government debt faced volatility as investors evaluated the potential influence of far-right parties on the new European Union executive. Bond yields rose across Europe, with a notable widening of the spread between French and German debt following an opinion poll suggesting the far-right National Rally could win the snap election, albeit without a clear majority.

Markets showed a muted response to Apple's AI strategy, which integrates "Apple Intelligence" technology across various apps. Apple’s shares fell 0.3% in after-hours trading, having slipped 1.9% during normal trading hours. S&P 500 futures and Nasdaq futures both eased 0.1% in Asian trading, after edging higher on Monday

Despite the rise in U.S. yields following Friday's jobs report and the subsequent adjustment in expectations for Federal Reserve rate cuts, the market has remained resilient. Futures now imply 37 basis points of Fed easing for this year, down from 50 bps before the jobs report. The Fed is expected to maintain its current policy stance at its Wednesday meeting, with attention focused on whether it keeps three rate cuts in its "dot plot" projections for this year.

The consumer price index (CPI) for May is forecast to show a modest 0.1% rise, with the core CPI expected to increase by 0.3%. In currency markets, the euro steadied around $1.0766 after hitting a one-month low overnight at $1.0733, influenced by U.S. jobs reports and European political uncertainty. The dollar remained strong at 157.17 yen, close to its May peak of 157.715.

Gold prices hovered just above one-month lows at $2,306 per ounce, affected by reduced market expectations for U.S. rate cuts. Oil prices consolidated Monday's 3% rally, with strong summer fuel demand and potential U.S. crude purchases for the Strategic Petroleum Reserve providing support. Brent crude dipped 4 cents to $81.59 a barrel, while U.S. crude remained unchanged at $77.74 per barrel. Investors await monthly oil supply and demand data from the U.S. Energy Information Administration and OPEC, with further insights expected from the International Energy Agency on Wednesday.

(By Commoditiescontrol Bureau: 09820130172)

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