US stock markets were closed on a public holiday on Monday, while major European indices finished higher on dip-buys. The Europe bond yields rose slightly from a sharp drop last Friday but stayed at the recent lows. The recent drops in the bond yields reflect lowered inflation expectations due to deteriorated broad economic data, coupled with recession fears.
The equity markets across Asia are also set to open higher as indicated by the futures price. The major Asian indices closed strongly on Monday as the Chinese stocks continued the upside momentum on the back of the government’s stimulus policy. According to multiple inland research institutes, China’s house sales rose 37% in June from the prior month after the commercial hub, Shanghai ended the strict covid-lockdown.
However, the prices of material metals, including copper and Zinc, fell further, suggesting that traders see a further slowdown in economic growth due to the ongoing global headwinds.
AU and NZ day ahead
The S&P/ASX 200 is set to open slightly higher as indicated by the SPI futures, up 0.02% overnight. The benchmark index rebounded strongly, with all the 11 sectors finishing in green on Monday. The recent optimism is fuelled by China’s reopening and bets of a less aggressive US Fed as bond yields fall. The Australian dollar rose 0.8%, to 0.6867 against the US dollar on Monday ahead of the RBA rate decision at AEST 2:30 pm today. The reserve bank is expected to raise the OCR by another 50 basis points to curb the elevating inflation, which printed at 5.1% in the first quarter. The Australian 2-year bond yield rose to 2.77% from 2.687% at the open yesterday.
The S&P/NZX 50 was up 0.041% in the first half-hour of trading. Air New Zealand continues to outperform on an improved outlook, up 2.4%, to NZ$0.63 at the open. The bank stocks, including heartland bank and Westpac, also jumped as New Zealand bond yields slumped in the last two weeks following the global trend, which provided a relief to the recession fear-triggered selloff.
US
The US markets closed on Independence Day. The futures markets fell marginally, with Dow future down 0.27%, S&P 500 future falling 0.36%, and Nasdaq declining 0.49%.
Europe
The Europe major indices were mostly up, snapping a four-day losing streak. The Stoxx 50 (+0.12%), FTSE 100 (+0.89%), DAX (-0.31%), CAC 40 (+0.40%).
Commodities
Crude oil prices rose as traders’ attention returned to supply issues. A weakened USD also helped to push up the crude prices. The OPEC+ members hardly committed an agreed volume for output increase. However, signs of China’s regional covid outbreak may cap the gains in today’s trading.
WTI: US$110.66 (+2.06%), Brent: US$113.50 (+1.68%), Natural Gas: US$5.88 (+2.64%)
Precious metals rose slightly on a recently softened USD and lowered bond yields. However, industrial material metals all fell on recession concerns
COMEX Gold futures: US$1, 808.30 (+0.38%), COMEX Silver futures: US$19.93 (+1.36%), Copper futures: US$3.57 (-1.03%)
Agricultural products fell further.
Wheat: US$846.00 (-4.30%), Soybean: US$1, 395 (-4.30%), Corn: US$607.50 (-1.98%).
Currencies
The US dollar index rose slightly to 104.95, hovering around the near 20-year highs. The greenbacks may face downside pressure as the US bond yields started to slide on lowered inflation expectations, while Australian dollar, New Zealand dollar, and the Canadian dollar rebounded against the US dollar as the risk sentiment seems to recover from the recent selloff in the equity markets, which usually have a positive correlation with the commodity currencies.
Treasuries
The US bond markets closed on Monday and all other major nations’ bond yields rose slightly.
US 10-year: 2.88%, US 2-year: 2.83%.
Germany bund 10-year:1.33%, UK gilt 10-year: 2.19%.
Australia 10-year: 3.55%, NZ 10-year: 3.65%.
Cryptocurrencies
The crypto markets rebounded in the last 24 hours despite more negative news. The leading cryptocurrencies have entered a tight range movement in the last two weeks, signaling the oversold markets may be set for a rebounding opportunity. With more Crypto leaders pausing withdrawals, the crypto markets face severe liquidity risks.
(See below prices at AEST 8:38 am according to Coinmarketcap.com)
Bitcoin: US$20,004 (+ 3.89%)
Ethereum: US$1,141 (+6.48%)
Cardano: US$0.4658 (+2.45%)
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