EQUITIES
Asia-Pacific stocks rose in Monday trade, with multiple major markets in the region rising more than 1% each.
Hong Kong’s Hang Seng index bounced back after falling into a bear market last week. By Monday afternoon in Hong Kong, the Hang Seng index rose 1.67%, while the mainland Chinese stock, the Shanghai composite up 1.32%.
The Nikkei 225 in Japan rose 1.85% while the South Korea’s KOSPI jumped 1.66%. The Australia’s S&P/ASX 200 traded 0.30% higher, the S&P BSE Sensex in India added 0.17%, and the Singapore’s Straits Times index traded just above the flatline.
European shares also poised for strong start later today as investors took comfort from strong earnings reports and Europe's high vaccination rates.
OIL
Oil prices rose on Monday, recovering from a 7-day losing streak as investors hunted for bargains and a softer dollar lent support, though persistent anxiety over surging cases of the Delta coronavirus variant kept sentiment cautious.
The Brent now traded at $66.40 per barrel, while U.S. crude futures traded at $63.40 per barrel.
On Friday last week, the Brent settled at $65.18 a barrel, and the WTI ends at $62.14 per barrel. Both benchmarks marked their biggest week of losses in more than nine months last week, as Brent slid about 8% and WTI fell about 9%.
CURRENCIES
The safe-haven dollar retreated from more than 9-month highs against major peers on Monday as a bounce in Asian stocks lifted sentiment, despite the continued spread of the Delta coronavirus variant. The dollar index, which measures the currency against six rivals, declined 0.18% to 93.2921 from Friday, when it climbed as high as 93.734 for the first time since Nov. 4.
U.S. Treasury yields were fairly quiet. The yield on benchmark 10-year Treasury notes was last 1.267% on Monday.
Bitcoin is closing in to the $50,000 level again in an ongoing recovery in the cryptocurrency market from a disorderly rout just three months ago.
GOLD
Gold prices edged higher on Monday after the U.S. dollar retreated from multi-month highs. Spot gold added 0.38% to $1,787.40 per ounce, while U.S. gold futures gained 0.25% to $1,788.40.
Silver rose 0.38% to $23.20 per ounce, while platinum firmed 1.45% at $1,008.60. Palladium gained 1.84% to $2,518.50, bounced off a 5-month low at $2,267.65 earlier.
ECONOMIC OUTLOOK
Asian shares bounced on Monday as a wave of bargain hunting swept beaten-down markets, though the mood remained brittle overall.
Investors are preparing for a rockier ride ahead for markets, as worries over slowing growth, a looming rollback of the Federal Reserve’s easy money policies and a global COVID-19 resurgence economic recovery.
Concerns over China's economy also still on the headlines, with Beijing's regulatory crackdown on the tech sector delivered a double blow to markets. More than $560 billion was wiped from Hong Kong and mainland China exchanges last week as funds fretted on which sectors regulators might target next.
Investors will be watching this week’s central bank symposium in Jackson Hole, Wyoming for clues on when the Fed will begin slowing its US$120 billion purchases of US government bonds. Chair Jerome Powell will give a speech at the event on the economic outlook. The spread of the Delta variant also has the potential to upset the timing of the U.S. Federal Reserve's tapering plans.
A raft of "flash" manufacturing surveys for August out on Monday meanwhile will offer an early indication of how global growth is faring in the face of the Delta variant, with analysts expecting some slippage and especially in Asia.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.008 and 110.223.
- Support line of 109.578 and 109.363.
Commentary/ Reason:
While the dollar made large gains on commodity and emerging market currencies, it has been more restrained against the Japanese yen at 109.945, which is benefiting from safe-haven flows.
The dollar rose modestly as the yen weakened on concern the worsening pandemic in Japan will lead to tighter restrictions that undercut economic growth.
The main trend is up according to the daily swing chart, although the upside momentum has been struggling for the past two weeks. A trade through 110.223 will signal a resumption of the uptrend. A move through 109.363 will change the main trend to down.
U.S. will release Markit manufacturing and services PMIs and existing home sales later today. A stronger-than-expected PMI reading would spur more dollar buying and gain in U.S. yields.
