EQUITIES
Asia-Pacific stocks fell broadly on Monday trade. The Nikkei 225 in Japan dropped 1.4% in afternoon trade while the South Korea’s KOSPI fell 0.89%.
In Hong Kong, the Hang Seng index slipped 1.59% by the afternoon. Mainland Chinese stocks also declined, with the Shanghai composite down about 0.31%.
Australian stocks also declined as the S&P/ASX 200 dropped 0.89%. The Singapore’s Straits Times index fell 0.84%, and the S&P BSE Sensex in India shed 0.70%.
Oil stocks are watched after OPEC+ reached a deal on Sunday. Santos in Australia falling 2.56%. Japan’s Inpex dropped 2.1%, while Japan Petroleum Exploration plunged 2.56%. CNOOC shares in Hong Kong slipped 1.35%. The semiconductor stocks also came under pressure tracking losses in their U.S. peers due to profit-taking.
European stocks are expected to open sharply lower on Monday as markets digest the latest OPEC + announcement regarding oil production and continue to brood on inflation.
OIL
Oil prices stumbled more than 1% on Monday after an agreement over the weekend within the OPEC+ to boost output, sparking some oversupply worries as COVID-19 infections continue to rise in many countries.
The Brent now traded at $73.03 per barrel, and U.S. crude futures traded at $71.20 per barrel.
On Friday, the Brent closed at $73.59, while WTI ended at $71.81 per barrel.
CURRENCIES
Benchmark 10-year Treasury yields dropped to a near 2-week low at 1.279%. The U.S. dollar index held firmer against a basket of major currencies at 92.712, not far from last week's 3-month top of 92.832.
GOLD
Gold prices eased as the dollar clawed up. Although still supported amid fears of rising inflation and a surge in coronavirus cases.
The spot gold slipped to $1,811.90 an ounce and declined to $1,812.90 per ounce for gold futures. Previously closed at $1,812.20 and $1,815.00, respectively.
ECONOMIC OUTLOOK
Asian stocks slipped lower on Monday amid concerns about elevated inflation and the impact of the Delta COVID-19 variant on plans for economic reopening. Traders are also monitoring the surprising rally in Treasuries, which pushed the 10-year yield lower for a third week.
Oil slipped after OPEC+ reached a deal on boosting supply. OPEC+ have agreed to increase oil production starting from August amidst improving demand, which may ease the pressure on supplies as well as oil prices. The accord reached a deal on Sunday agreed to phase out 5.8 million bpd of oil production cuts by September 2022.
Next on investors' radar is June quarter corporate earnings with Netflix, Philip Morris, Coca Cola, and Intel Corp among companies expected to report this week.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.102 and 110.209.
- Support line of 109.759 and 109.653.
Commentary/ Reason:
Against the safe haven yen, the dollar was down 0.1% at 109.929, edging closer to the recent 1-month trough of 109.533 recorded on July 8.
The recent decline in T-note yields sparked short-covering in the yen.
The yen also edged higher amid fears of rising inflation and a surge in coronavirus cases, as well as the drop in the Japan’s Nikkei on Monday.
The chart for the USD/JPY pair shows that the latest recovery fell short of conviction from sellers and buyers to drive a trend change. Momentum indicators have flattened in neutral territory.
