All three major US indices closed at record highs last night, led by NASDAQ’s 0.78% jump that helped it to break out above the 9,000 point mark.
The S&P 500 index advanced 0.51% to close at 3,239 points, fuelled by a rally in consumer discretionary (+1.43%), communication (+0.81%), information technology (+0.74%) and financials (+0.55%). Brent crude oil price extended gains to a three-month high at US$ 68.0, as trade risk abated and economic outlook brightened.
The US dollar index fell for a third day to 97.20 while riskier currencies namely AUD and NZD outperformed other G10 peers. This suggests risk sentiment is still skewed towards the positive side.
JPY is among the strongest major currency today as Japan’s CPI smashed expectations from the upside. Tokyo CPI advanced 0.9% year-on-year and the core CPI is up 0.8% year-on-year, higher than consensus forecast of 0.2%. Consumer prices are the main factor when it comes to influencing overall inflation. Rising inflation is likely to limit the central bank’s ability and willingness to carry out easing policies, and thus lead to a strengthening in the currency.
Asian markets today will likely be lifted by the rally in US markets overnight. The Hong Kong and Australia market is resuming trading after the holiday break. Energy and offshore & marine sectors could be well supported by rising crude oil prices, and the mining sector could be boosted by a rebound in spot gold prices.
Technically, gold price has broken out above its SuperTrend (10, 2) and the trend now has started to slope upward. This suggests probably more upside towards US$ 1,520 and then US$ 1,550. A weakening dollar helped to propel precious metals prices but this single factor is insufficient to explain a jump like this. Bargain hunting is probably a better justification as gold looks for a technical rebound after three-month consolidation.
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Margaret Yang Yan