EQUITIES
The broader Asia-Pacific markets were mixed on Monday trade. The Hang Seng index in Hong Kong fell 3.41%, leading losses in the region, followed by the Shanghai composite in the mainland China that slumped 3.04%. The South Korea’s KOSPI edged 0.65% lower, and in Singapore, the Straits Times index slipping 0.57%.
In other markets, the Australia’s S&P/ASX 200 traded 0.12% higher, while the S&P BSE Sensex in India added 0.15%. Returning to trade following holidays on Thursday and Friday, the Japanese Nikkei 225 jumped 0.93%.
On Friday, the Dow Jones Industrial Average closed above 35,000 for the first time ever while the S&P 500 jumped 1.01% to 4,411.79 and the Nasdaq Composite gained 1.04% to 14,836.99. Friday’s moves upward saw all three major indexes stateside at new closing highs.
OIL
Oil prices were little changed on Monday as investors balanced concerns about fuel demand from the spread of COVID-19 variants and floods in China against wagers that demand will remain strong as the global economy gradually opens and supply stays tight.
The Brent traded at $73.37 per barrel, and U.S. crude futures traded at $72.19 per barrel.
On Friday, the Brent closed at $74.10, while WTI ended at $72.07 per barrel.
CURRENCIES
The bond market awaited the prospect of eventual tapering later in the week. The yields on U.S. 10-year notes having fallen for four weeks in a row stand at 1.261% on Monday.
The dollar index, which measures the currency against six major peers, stood at 92.825 at the start of the week, off from last week's 3-1/2-month high of 93.194.
Bitcoin surged to nearly $40,000, extending a recent recovery. The largest cryptocurrency rose as much as 15% to $39,681 before paring some of the climb. Second-largest cryptocurrency Ether also surged, recovering from as low as $1,717 last week, and was last up at $2,2348.
GOLD
Gold prices hovering around the $1,800 on Monday, as the U.S. dollar also held firm, with investors turning their attention to the FOMC meeting this week. Spot gold added to $1,808.10 per ounce, while the U.S. gold futures gained to $1,809.60 per ounce.
ECONOMIC OUTLOOK
Asian shares hit a seven-month lows on Monday, dragged by the regulation concerns that toppled Chinese equities and strong U.S. corporate earnings that sucked funds out of emerging markets into Wall Street. Investors also continued to monitor the COVID-19 situation in Asia and globally as it weighs on sentiment.
Chinese shares slumped on worries over the impact of government regulations over the education and property sectors, after Beijing barred for-profit tutoring in core school subjects. The crackdown on tutoring firms follows a tightening grip on China's internet sector and data-related that has rattled global investors.
Geopolitical tensions between Washington and Beijing also may have weighed on investor sentiment, as a high-level meeting between the two economic powerhouses got off to an bitter start. China’s vice foreign minister said during Monday talks with the U.S. deputy secretary of state that the two countries’ relationship is “now in a stalemate and faces serious difficulties,” according to an English-language press release from China’s Ministry of Foreign Affairs.
More than one-third of S&P 500 companies are set to report quarterly results this week, headlined by Facebook Inc, Tesla Inc, Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com.
The week is also packed with U.S. data that should underline the economy's outperformance. The Q2 GDP is forecast to show annualised growth of 8.6%, while the core inflation is seen rising an annual 3.7% in June. The Federal Reserve meanwhile meets on Tuesday and Wednesday, where investors will look out for clues on when the U.S. central bank might rein in its easy monetary policies.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.650 and 111.019.
- Support line of 109.456 and 109.087.
Commentary/ Reason:
The dollar bought 110.298 yen, pulled back down as it is approaching the peak of 110.588 from Friday, which was the highest since July 19.
Dollar falls on Friday on broad-based yen buying. Japanese financial markets return after an extended closure since last Thursday.
Market's focus today include the U.S. building permits, new home sales and Dallas Fed manufacturing business index, as well as Japan's PMI.
A sustained move above the intraday high will indicate the presence of buyers and could move towards the high of July 14. Alternatively, as price moves lower, it could be retracted back to the mentioned 20-day SMA. The USD/JPY pair will make the next move towards Friday’s low, followed by the support level.
