EQUITIES
Shares in Asia-Pacific were mostly higher on Thursday trade. Shares in Australia rose 0.33%, while over in South Korea, the KOSPI index edged 0.48% higher. The S&P BSE Sensex index added 0.34% and the Hang Seng index in Hong Kong rose 0.39%. Shares in Singapore were muted as the FTSE Straits Times Index traded below the flatline.
Elsewhere, the Shanghai composite in mainland China slipped 0.25% while the Japan’s Nikkei 225 traded 0.12% lower.
Overnight on Wall Street, the Dow Jones Industrial Average rose 0.06% to 34,466.24, and the S&P 500 gained 0.47% at 4,239.18, to close above its prior record high set on May 7. The Nasdaq Composite added 0.78% at 14,020.33, spurred by growth stocks that thrive on low interest rates.
OIL
Oil prices slipped on Friday but were set for their third weekly rise on expectations for a recovery in fuel demand in Europe, China and the U.S. as rising vaccination rates lead to an easing of pandemic curbs.
The Brent now traded at $72.16 per barrel, and U.S. crude futures traded at $69.94 per barrel.
Brent is set for a gain of 0.5% this week while WTI is set to climb 0.6%.
Overnight, the Brent closed at $72.52 while WTI ended at $70.29 per barrel.
CURRENCIES
The 10-year U.S. Treasury note's yield fell to a 3-month low of 1.43%, after a jump in U.S. CPI was viewed as insufficient to alter the Fed’s easy monetary policy stance. Last at 1.444%.
The U.S. dollar index also fell slightly after the figures were published and last sat at 89.990.
Cryptocurrencies looked to close out the week steady, with bitcoin seemingly well supported about $35,000 despite more talk of global regulatory scrutiny.
GOLD
Gold looks to reclaim position above $1,900 per ounce level on Friday, supported by a pullback in the dollar and lower bond yields.
The spot gold advanced to trade at $1,899.20 an ounce and rose to $1,903.00 per ounce for gold futures. Previously closed at $1,898.20 and $1,896.40, respectively.
Silver rose 0.82% at $28.260 per ounce, platinum added 0.58% to $1,152.70, while palladium edged slightly lower to $2,775.50.
ECONOMIC OUTLOOK
A broad gauge of Asian shares rose on Friday as investors judged the U.S. inflation figures to back the Federal Reserve's conviction that rising inflation will be transitory, leaving scope for ongoing central-bank support.
The U.S. Labor Department said the CPI in the 12 months jumped 5.0% in May, the biggest year-on-year increase since August 2008, and higher than 4.7% forecasted. The increase was driven largely by categories associated with a broader reopening of the economy, as vaccinations bring the pandemic under control. Data of people filing new claims for unemployment benefits meanwhile fell last week to the lowest level in nearly 15 months.
This latest market reaction suggests investors are aligning with the Fed’s view that inflationary pressures are temporary and that any changes in ultra-accommodative policy will likely happen very gradually.
That approach was also reinforced in Europe, as the ECB raised its inflation forecast and renewed its March’s pledge to maintain faster emergency bond-buying to sustain the euro area.
For events to watch Friday, investors will be keeping an eye on the opening of the G7 leaders’ summit in Cornwall, England. Traders also awaiting the UK’s GPD figures, trade balance & industrial production. The International Energy Agency meanwhile to publish the oil market report.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 109.812 and 110.013.
- Support line of 109.162 and 108.961.
Commentary/ Reason:
The dollar added 0.08% to 109.396 yen on Friday but was headed for a small weekly loss.
While the pair continues to float higher, the greenback still loses its ground due to rising inflation.
As the dollar is approaching the support line, yet the Japanese yen weakness is also playing a role in the trajectory of price action. A slump in Japanese government bond yields undercut the yen.
The Japan 10-year JGB bond yield fell to a more than 4-month low Thursday of 0.049%. A rally in the S&P 500 to a new record high Thursday also reduced the safe-haven demand of the yen.
