EQUITIES
Shares in Asia-Pacific were higher on Tuesday trade, with the Nikkei 225 in Japan rising 0.70%, and the South Korea’s KOSPI 0.74% higher. In mainland China, the Shanghai composite rose 0.42%, while the Hong Kong’s Hang Seng index gained 1.79%.
The S&P/ASX 200 in Australia edged 0.16% higher, the Singapore’s Straits Times index advanced 0.57%, and the S&P BSE Sensex in India added 0.44%.
Overnight on Wall Street, all three major indexes closed at their highest levels ever. The Dow Jones Industrial Average rose 0.36% to end at 34,996.18 points, while the S&P 500 gained 0.35% to 4,384.63, and the Nasdaq Composite climbed 0.21% to 14,733.24.
OIL
Oil rose on Tuesday, recovering from the previous day's drop, as expectations of tight supply and declines in U.S. crude inventories outweighed fears of COVID-19 variants spread.
The Brent now traded at $75.33 per barrel, and U.S. crude futures traded at $74.32 per barrel.
Overnight, the Brent closed at $75.16, while WTI ended at $74.10 per barrel.
CURRENCIES
Concerns that climbing cases of the pandemic around the world derailing a global economic recovery fuelled appetite for safe-haven U.S. Treasuries. The benchmark U.S. 10-year bond yield slipped last week to a 5-month low of 1.25%, and since stabilised, at 1.368% on Tuesday.
In currency markets, the dollar index, which tracks the greenback against a basket of major currencies, was last down at 92.175, after touching a 3-month top of 92.844 last week.
Cryptocurrencies were on the defensive with bitcoin down about 4% at $33,080 and ether down 6% at $2,030.
GOLD
Gold steadied on Tuesday as investors cautiously looked forward to U.S. inflation data that could influence the Federal Reserve’s timeline for easing its bond purchases. A more benign inflation data will mean that the Fed would feel slightly less inclined to ease its asset purchases, which should benefit gold.
The spot gold rose to $1,809.10 an ounce and added to $1,809.40 per ounce for gold futures. Previously closed at $1,806.50 and $1,805.90, respectively.
Elsewhere, silver rose 0.3% to $26.33 per ounce, palladium slipped 0.3% to $2,850.50 and platinum was 0.4% lower at $1,118.4.
ECONOMIC OUTLOOK
Asian shares climbed on Tuesday trade after Wall Street hit record highs overnight. While investors are still bullish over the stocks, some new positioning are expected to take place ahead a batch of economic data, including the China’s trade data for June and key U.S. inflation figures later in the day.
Investors also are bracing for the start of the U.S. earnings season, with JPMorgan, Goldman Sachs, Bank of America, and other big banks kick off results from Tuesday.
U.S. crude inventories were expected to fall for an eighth consecutive week, while gasoline stocks also declined. Meanwhile, OPEC+ is yet to make progress closing divisions between Saudi Arabia and the UAE that last week abandoned a deal to raise oil output, making another policy meeting this week less likely.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.503 and 110.676.
- Support line of 109.943 and 109.770.
Commentary/ Reason:
The Japanese currency stood at 110.388 yen per dollar on Tuesday, having slipped overnight to edge further away from last week’s 1-month high of 109.533.
The pair is largely steady in the Asia session, as markets await the inflation data due at 1230 GMT - leaving the dollar holding modest gains against the Japanese yen.
A miss of the inflation data on either side could move the greenback and the bond market by shifting expectations on interest rates. A fall in inflation will lead investors to bet that the U.S. central bank can maintain easy policy for longer, and also pointed to the yen as a beneficiary.
Nikkei’s rally on the day and speculation of the BoJ may cut its Japan 2021 GDP forecast when it meets later this week are negative for the yen.
The USD/JPY pair is making a recovery. Intraday bias remains neutral, and risk stays on the downside with 110.50 resistance. On the downside, break of 109.94 will suggests that it is at least correcting the rise from 102.50 mark.
