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EQUITIES
Shares in Asia-Pacific traded higher on Monday trade, with shares in Japan and South Korea leading gains regionally. Japan’s Nikkei 225 surged 2.22% in afternoon trade while the South Korea’s KOSPI also advanced more than 1%.
Mainland Chinese stocks rose, with the Shanghai composite up 0.65% and the Hong Kong’s Hang Seng index gained 0.44%. The S&P/ASX 200 in Australia edged 0.78% higher, the Singapore’s Straits Times index rose 0.22%, and the S&P BSE Sensex in India added 0.51%,
European stocks are expected to open in mixed territory later today as global markets head in different directions.
OIL
Oil prices steadied on Monday after ending a volatile week with a bounce as U.S. inventories tightened. Although there is still uncertainty about the outlook for supplies after OPEC talks on restrictions broke down.
The Brent now traded at $75.36 per barrel, and U.S. crude futures traded at $74.33 per barrel.
On Friday, the Brent closed at $75.55, while WTI ended at $74.56 per barrel.
CURRENCIES
Yields on U.S. 10-year notes were steady at 1.358%, having been as low as 1.25% on Friday following eight straight sessions of price gains.
That bout of risk aversion had also supported the safe haven dollar, until it ran into some profit taking on Friday. It was last at 92.203 on a basket of currencies on Monday, after touching a 3-month top of 92.844 last week.
Cryptocurrencies were little moved, with bitcoin at $34,199 and ether at $2,144.
GOLD
Gold prices eased on Monday on stronger dollar and buoyant equities. The spot gold slipped to $1,800.70 an ounce and shed to $1,801.30 per ounce for gold futures. Previously closed at $1,807.90 and $1,810.60, respectively.
ECONOMIC OUTLOOK
Asian shares were enjoying a relief rally on Monday as record highs on Wall Street and policy easing in China helped calm some of the recent jitters on global growth, though plenty of potential pitfalls lay ahead later this week.
China proposed draft rules calling for all data-rich tech companies with over one million users to undergo security reviews before listing overseas. The regulation came in the wake of a regulatory probe of Chinese ride-hailing giant Didi Chuxing for allegedly violating data privacy laws.
In the U.S., inflation data on Tuesday could provide a scare ahead of testimony by Federal Reserve Chair Jerome Powell on Wednesday and Thursday, where markets will be hyper-sensitive to any talk of early tapering.
The earnings season also kicks off with JP Morgan, Goldman, Citigroup and Wells Fargo among those reporting.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.342 and 110.499.
- Support line of 110.028 and 109.871.
Commentary/ Reason:
Against the yen, the dollar stood higher at 110.185 yen, off Thursday's 2-1/2-month low of 109.533 yen.
A recovery in risk sentiment hampered the safe-haven yen. And with the data calendar on Monday relatively bare, many investors are looking to Tuesday's U.S. consumer price data for June.
Any signs that inflation could be more persistent than previously thought could fan expectations the Fed may exit from current stimulus earlier, supporting the dollar against other major currencies. Conversely, a more benign data could lead investors to think the U.S. central bank can afford to maintain an easy policy framework for longer, encouraging more bets on risk assets, including risk-sensitive currencies.
Japanese wholesale prices data on Monday showed a surge in June as import costs spiked at the fastest pace on record. Japan's economy is recovering moderately as robust exports offset some of the weakness in consumption. But a resurgent coronavirus forced Japan to declare a state of emergency in the capital Tokyo that will last through the Olympics Games, casting doubts over the strength of the recovery.
The USD/JPY pair is making a recovery after a sharp rise in bearish sentiment resulted in a break of the long-established ascending trendline. Buyers have since returned and the trendline may now act as a resistance zone for the pair.
