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APAC Week Ahead: Too High to Chase?

The stock market’s rally is heating up as FOMO chasers may have rushed to catch up with bulls. Not only the AI stock group but also other equity sectors started to speed up gains following the US Fed’s suspension on rate hikes. With several mega-cap tech companies, including Apple, Microsoft, and Nvidia, hitting fresh highs, Nasdaq maintained the frontrunner’s position in the bull market, up more than 30% year-to-date. But hold on, is the US market currently overbought?

It will be a shortened week for the US markets as Monday is a public holiday. Existing home sales and the manufacturing PMI will be the focus on the economic front. FedEx is to release its quarterly earnings report this Wednesday.

In Asia, Japanese markets kept refreshing record highs as the BOJ insisted on the ultra-loose monetary policy. China’s rebound seems again to become a topical event for global markets as the Chinese central bank may cut its borrowing rates, Loan Prime Rates, this week, which will be in the spotlight. Commodity prices and Australian miners may get boosted further if this happens.

European markets have been hovering around all-time highs for the last few months despite central banks’ hawkish stance. The BOE’s policy rate decision this week will certainly steer the market movements for the region. 

What are we watching?

  • The USD weakens: The king dollar fell after the Fed paused hiking the interest rate after 10 consecutive increases. The dollar index fell to a one-month low.   
  • Mega-caps hit new highs: The AI-powered tech giants, including Apple, Microsoft, and Nvidia, surpassed their previous highs last week. Some investors believe that artificial intelligence technology can help these companies to cut costs and improve efficiency in a tough macro environment. But it is worth knowing that most of these topical stocks may be overbought from a technical perspective.
  • Chinese shares rebound: Chinese stock markets rebounded sharply in June on bets that the Chinese government will impose more stimulus measures to aid the country’s economic recovery. Hang Seng Index rose more than 10% month-to-date, buoyed by tech and EV stocks.
  • Gold may set to rise again: The precious metal may take a ride of the weakened USD and set for another rally. Gold usually traces the movement of long-dated US bonds, which may also start climbing amid the Fed’s suspension in rate hikes.
  • Oil rebounds: Crude oil may take China’s rebounding tailwind as the country’s refinery rose sharply in May, implying an improved demand outlook. A softened USD also aided the oil price’s jump. 

Economic Calendar (19 June – 23 June)

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