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Global equity/currency market update: Asian Markets Rise Amid Eased European Political Worries and Anticipated Fed Remarks

18 Jun 2024 8:57 am
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Mumbai, 18 Jun (Commoditiescontrol): Asian stocks followed Wall Street's lead on Tuesday, climbing higher as investors awaited speeches from several Federal Reserve officials later in the day. The Australian dollar remained steady, and domestic shares surged ahead of the country's interest rate decision. Easing concerns over political instability in Europe also contributed to the positive market sentiment, pushing EUROSTOXX 50 futures up by 0.6%, reversing some of last week's significant losses. Similarly, FTSE futures increased by 0.43%.

In Asian trading hours, the main focus was on the Reserve Bank of Australia's (RBA) policy decision, where it was widely expected that the central bank would maintain current interest rates. Market participants were particularly interested in any forward guidance on a potential easing cycle. The Australian dollar edged up by 0.07% to $0.6617, while Australian shares rose by 0.9%, mirroring gains in regional markets.

MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.68%, buoyed by the overnight rally on Wall Street. Japan's Nikkei climbed by 0.83%, Hong Kong's Hang Seng Index inched up by 0.14%, and Chinese blue-chips saw a modest gain of 0.17%.

Central banks in Norway, the UK, and Switzerland are also scheduled to meet this week. Market expectations suggest that the central banks of Norway and the UK will hold rates steady, while the Swiss National Bank is anticipated to implement a 25 basis point rate cut.

In the United States, six Federal Reserve speakers are scheduled to provide further insights on the interest rate outlook following last week's policy decision. Futures markets are now pricing in approximately 45 basis points worth of Fed cuts for the remainder of 2024.

In currency markets, the dollar showed mixed performance on Tuesday, dipping slightly by 0.04% to 157.68 yen. The euro edged down to $1.0729, while the British pound rose by 0.04% to $1.27105. China's onshore yuan hovered near a seven-month low at 7.2554 per dollar, pressured by mixed economic data indicating that further support might be needed from Beijing to bolster the economy.

"China's May economic data suggest that policymakers have a lot to do to sustain the fragile recovery," commented analysts at Societe Generale. "The supply side and external demand remained more robust than domestic demand, despite the moderation in industrial production growth."

Oil prices also saw an uptick due to a stronger demand outlook and investor confidence that OPEC+ producers might pause or reverse plans to increase supplies in the fourth quarter. Brent crude futures rose by 0.11% to $84.34 per barrel, while U.S. West Texas Intermediate crude futures stood firm at $80.34 a barrel. Spot gold edged up by 0.13% to $2,321.99 an ounce.

(By Commoditiescontrol Bureau: 09820130172)

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