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Global Market Update: Asian Shares Slip Ahead of Key U.S. Inflation Data and Geopolitical Events

24 Jun 2024 9:09 am
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Mumbai, 24 Jun (Commoditiescontrol): Asian shares slid on Monday as investors awaited crucial U.S. price data, expected to show a renewed moderation in inflation. The markets were also on high alert for potential Japanese intervention as the dollar neared the 160 yen mark.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.9%, having reached a two-year peak last week. South Korean stocks fell 0.8%. S&P 500 futures and Nasdaq futures both edged down by approximately 0.1%. Boeing shares could face pressure following a Reuters report that U.S. prosecutors are recommending criminal charges against the aircraft maker.

European markets also felt the strain, with EUROSTOXX 50 futures down 0.2% and FTSE futures losing 0.3%.

In Japan, the Nikkei inched up 0.2%, but the continued decline of the yen is putting pressure on the Bank of Japan (BOJ) to tighten policy despite mixed domestic economic data. Minutes from the BOJ's last policy meeting revealed extensive discussions about tapering bond buying and raising interest rates.

Japan's top currency official expressed disapproval of the yen's latest drop, which saw the dollar reach 159.94 yen. Currently, the dollar is trading slightly lower at 159.70 yen, with eyes on the 160.245 peak from late April, where Japan is believed to have spent around $60 billion buying yen.

The demand for carry trades, borrowing yen at low rates to invest in higher-yielding currencies, has driven the Australian and New Zealand dollars to 17-year peaks against the yen. Even the euro is testing recent highs at 170.87 yen, despite weak manufacturing surveys (PMI) that left it stuck at $1.0688.

In contrast, U.S. manufacturing surveys showed activity at a 26-month high in June, though price pressures have considerably subsided. This shift has increased anticipation for the personal consumption expenditures (PCE) price index due on Friday. Annual growth in the Federal Reserve's preferred core index is expected to slow to 2.6% in May, the lowest in over three years.

A low PCE result would likely bolster market bets on a Fed rate cut as early as September, with futures currently pricing this as a 65% likelihood. This week, at least five Fed officials, including San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman, are scheduled to speak.

In commodity markets, gold felt the weight of a firm dollar, holding at $2,324 an ounce. Oil prices eased slightly after rising around 3% last week, with Brent crude down 17 cents to $85.07 per barrel and U.S. crude losing 18 cents to $80.55 per barrel.

(By Commoditiescontrol Bureau: 09820130172)

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