- Most of Asia-based stock markets gain following a successful session on Wall Street
- US dollar on the back foot losing the most in the G10 basket
- Australian data (including trade) comes in below expectations, AUD delicately poised in the morning
Three prime indices in the US ended Wednesday with decent gains, and it encouraged Asian investors to buy riskier assets as well. Let us point out that a rally on Wall Street yesterday was mainly driven by banks’ shares giving the Dow Jones (US30) its best day in almost 2 months whereas the NASDAQ (US100) closed at another record high. The entire financial sector gained 1.8% contributing the most to the overall increase. To some extent this sector was boosted by rising yields sparked in part by remarks coming from ECB senior member that a debate on exiting the bond buying programme might be brought up as soon as next week. Having regard to specific banks one may single out JPMorgan climbing 2.3% as well as Goldman Sachs adding 1.7%. Upbeat moods were even not spoilt by the news that US Treasury Secretary Steven Mnuchin, who was to urge Trump to exempt Canada from steel and aluminium tariffs, reportedly had not called on Donald Trump to exclude Canada from the lately imposed levies.
In Asia the Japanese NIKKEI (JAP225) is rallying nearly 1% despite a 0.25% gain in the yen. Stocks in China are also higher gaining 0.75% (Hang Seng) at the time of writing. Notice that Chinese equities may have been partially supported by conjectures the PBoC could cut reserve requirement ratio (RRR) for banks if the data on China’s FX reserves show a drop to the lowest level since August (the release is due today).
On the FX front one may spot that the US dollar is again on the back foot being the worst major currencies almost an hour before the London’s opening. The euro, encouraged by the yesterday’s hawkish commentaries from ECB members, has already been able to breach a 1.18 handle whereas the pound stayed above 1.34 yesterday. Looking into macroeconomic readings which were released overnight it’s worth paying the most attention to two prints from Australia as both of them fell shot of estimates. AiG index, measuring performance in construction, fell in May to 54 from 55.4 whilst the trade data showed a surplus in April equal 997 million AUD while the median estimate had pointed to 1 billion AUD. However, when it comes to numbers regarding trade it needs to be said that the value for March was revised upwardly to 1.731 billion from 1.527 billion making overall tone not so grim. Finally let’s add that exports dropped 2% in a monthly basis whereas imports remained unchanged. By and large, the Australian trade balance is not in the spotlight, unlike those in China or the EU, as the US holds a surplus with this country.
This article is provided for general information purposes only. Any opinions, analyses, prices or other content is provided for educational purposes and does not constitute investment advice or a recommendation. Any research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Any information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.
Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk, we do not accept liability for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.