EQUITIES
Asia-Pacific markets were higher on Thursday trade, except for Chinese stocks that were subdued. The Shanghai composite and the Hong Kong’s Hang Seng index were both down around 0.12%.
Elsewhere, the Nikkei 225 in Japan rose 0.27%, while in South Korea, the KOSPI marginally rose 0.08% higher. The S&P BSE Sensex in India advanced 0.27%, and the Singapore’s Straits Times index added 0.42%. Australia’s S&P/ASX 200 was just above the flatline.
Easing concerns about the potential for runaway inflation and the approval of a trillion-dollar U.S. infrastructure package lifted the Dow Jones Industrial Average and S&P 500 to close at record levels on Wednesday. The Dow Jones Industrial Average rose 0.62%, to 35,484.9, and the S&P 500 gained 0.25%, to 4,447.77. The Nasdaq Composite meanwhile dropped 0.16%, to 14,765.14.
European shares also hit record highs, clocking their longest winning streak in two months. European shares on Thursday poised for strong start as investors took comfort from strong earnings reports and Europe's high vaccination rates.
OIL
Oil prices were steady on Thursday following two days of gains after the U.S. President Biden's administration on Wednesday urged the OPEC+ to boost oil output to tackle rising gasoline prices that seen as a threat to the global economic recovery.
The Brent last traded at $71.54 per barrel, while U.S. crude futures traded at $69.28 per barrel.
Overnight, the Brent settled at $71.44 a barrel, and the WTI ends at $69.25 per barrel.
CURRENCIES
U.S. Treasury yields fell in choppy trading Thursday, despite a strong 10-year note auction overnight. The 10-year yields fell from 4-week peaks earlier in the session to stand at 1.345%.
The dollar index, which measures the greenback against a basket of six rivals, was little changed at 92.873, following a 0.19% decline from Wednesday, when it rose as high as 93.195, its highest since April 1, and not far off its 2021 high of 93.439.
In cryptocurrencies, bitcoin touched back above S$46,000, the highest since mid-May. Smaller rival ether stood around $3,200 after advancing to $3,279.99 overnight for the first time since May 19.
GOLD
Gold held on to overnight gains, with the spot price down marginally having risen 1.3% in the previous session. Easing of fears about higher interest rates would typically help the non-interest-bearing asset.
Spot gold stood at $1,751.10 per ounce, while U.S. gold futures slipped to $1,751.80 per ounce.
Silver eased 0.33% to $23.41 per ounce. Platinum slipped 0.44% to $1,011.10, and palladium was steady at $2,637.00.
ECONOMIC OUTLOOK
Asian stocks look set for modest gains Thursday, following a strong close on Wall Street overnight after data showed inflation was not as bad as feared. The tame U.S. inflation eased concerns that the Fed will imminently signal a scaling back of bond purchases, although fears of further waves of the coronavirus continue to dampen sentiment.
Markets will continue to monitor the COVID-19 situation in the region after the WHO warned global cases could pass 300 million by early next year if the pandemic continues in its current direction. The Delta variant of the new coronavirus is spreading quickly in many Asian countries, raising fears about local restrictions on travel and other activity damaging the economic recovery.
U.S. consumer price increases slowed in July, rose 0.5% after climbing 0.9% in June and 5.4% from a year ago. While the core CPI rose 0.3% from the prior month and 4.3% from July 2020.
China’s crackdown on private enterprise is again in focus. Its banking and insurance watchdog is stepping up scrutiny of insurance technology platforms, widening a regulatory dragnet that has roiled global investors. The nation’s central bank is also facing mounting calls to cut interest rates as fresh coronavirus outbreaks threaten to hamper the economic recovery.
In focus later will be the EIA's official US inventory figures and OPEC monthly oil market.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.808 and 111.007.
- Support line of 110.163 and 109.963.
Commentary/ Reason:
The dollar eased to 110.389 yen, continuing to pull back from a 5-week high of 110.798 reached overnight.
The pair early on surged on the back of higher U.S. Treasury yields, but later retreated following the release of inflation figures.
The yen traded slightly higher against the U.S. dollar as the greenback retreated after the release of the CPI report that confirmed moderating inflation.
Although, pressure is still on for the yen, especially after the U.S. lawmakers agreed to a $1 trillion dollar infrastructure bill to boost the U.S. economy, and many analysts still expect the Fed to announce a tapering of stimulus this year, potentially as soon as next month.
The USD/JPY pair is unable to climb the 110.80 price level. Break of the level will turn bias to the upside for retesting 111.0 high. This resistance area has been an obstacle in the past, where sellers have typically returned, therefore strong bullish conviction will be required.
The USD/JPY pair expected to hold on to intraday gains and has room to extend its advance, although it may correct lower in the near-term. Break of 110.16 will dampen this bullish view, and turn bias to the downside for 109.96 support.
