EQUITIES
Shares in Asia-Pacific were mixed in Monday trade, with investors monitoring stocks related to embattled developer China Evergrande Group. Shares of Evergrande New Energy Vehicle Group in Hong Kong plunged more than 10% by Monday afternoon in the city. Evergrande Group shares were flat.
Mainland Chinese stocks were lower by the afternoon, leading losses regionally, with the Shanghai composite 1.22% lower while the Japan’s Nikkei 225 dipped fractionally.
Elsewhere, the broader Hang Seng index in Hong Kong gained 0.35%, the South Korea’s KOSPI gained 0.13%, the S&P/ASX 200 in Australia climbed 0.54%, the Straits Times index in Singapore rose 1.04%, and the S&P BSE Sensex in India added 0.10%.
European stocks are set to rise on Monday, with German election results seen eliminating a key market risk for investors in the region.
U.K. energy stocks like BP will be closely watched today, after panic buying over the weekend due to a truck driver shortage that left many gas stations in Britain without any fuel.
OIL
Oil prices rose for a fifth straight day on Monday, as supply tightness continues to draw on inventories across all regions with the easing of pandemic conditions.
The Brent now traded at $79.09 per barrel, while U.S. crude futures traded at $74.97 per barrel.
On Friday last week, the Brent ends at $78.09 a barrel, and the WTI at $73.98 per barrel.
CURRENCIES
U.S. yields climbed to their highest since the start of July in anticipation of tighter U.S. monetary policy, while the dollar hovered in the middle of its range of the past week versus major peers.
The benchmark 10-year U.S. Treasury yield touched 1.466% for a second day on Monday, the highest since July 2, before eased to 1.447%
Against a basket of currencies, the dollar was firm at 93.227 and just off August's 10-month top of 93.734.
Bitcoin steadied at $44,050 after taking a fall on Friday after Chinese regulators announced a blanket ban on all crypto transactions and mining. Ether added to $3,123.
GOLD
The firmer dollar has weighed on gold, though it was a little firer on Monday at $1,758.30 an ounce and above a recent six-week low of $1,738. The U.S. gold futures added 0.43% to $1,759.30.
Silver rose 1.07% to $22.66 per ounce, platinum jumped 1.62% to $995.80, and palladium added 1% to $1,970.50.
ECONOMIC OUTLOOK
Asian shares crept higher on Monday as risk sentiment turned for the better, though a surge in oil prices to three-year highs could inflame inflation fears and aggravate the recent hawkish turn by some major central banks.
Eyes will be on U.S. fiscal policy with the House of Representatives due to vote on a $1 trillion infrastructure bill this week, while a Sept. 30 deadline on funding federal agencies could force the second partial government shutdown in three years.
The week is packed with U.S. Federal Reserve speeches led by Chair Jerome Powell on Tuesday and Wednesday, with more than a dozen other events on the calendar, including the second quarter U.S. GDP, durable goods order, personal income, personal consumption, and consumer confidence.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.871 and 111.274.
- Support line of 109.565 and 109.162.
Commentary/ Reason:
The dollar strengthened as far as 110.798 per yen, matching a high since July 7, before trading little lower at 110.592.
The lift in yields bolstered the U.S. dollar, particularly against emerging market currencies which compete with Treasuries for global funds. It even made some ground on the yen to reach a major chart barrier at 110.79. U.S. yields climbed to their highest since the start of July in anticipation of tighter U.S. monetary policy.
The safe-haven yen sank as fears of widespread contagion from China Evergrande Group receded.
The USD/JPY pair has enjoyed a bullish run in recent trading. Initial bias is now on the upside this week. USD/JPY is meeting channel resistance near 110.87 resistance, and a break will target a test on 111.27 high. On the downside, sellers have returned in the early Asian trading session and the previous range may remain intact.
