After taking a break on Friday, the recovery trend in risk markets resumed in full force Monday. Stock markets in the US and Europe rose 1.5%-2.5% on the day. Steady advances through the US trading day indicate growing underlying accumulation and positive momentum heading into the start of today’s Asia Pacific trading session.
Just as they helped to drive markets down at the start of the year, recovering commodity prices have helped to support the current stock recovery. Crude oil also resumed its recovery trend today with Brent gaining over 5% and WTI gaining nearly 7% as more steps toward a truce in Syria led by the US and Russia raises hopes that the truce in the oil supply war discussed last week could take hold starting with agreements to cap production at January levels. Rising oil also helped to boost oil sensitive currencies like CAD and RUB.
Copper also continues to rise as fears China’s economy could collapse continue to fade amid indications the government plans to support the country’s economic transition. Rising metals has boosted interest in mining stocks and AUD, with NZD also being pulled along the recovery trail. 10% plus gains on the day by Alcoa, Freeport, Teck and HudBay suggest Australian base metal miners could attract interest today as well.
On the other hand, capital has been flowing out of defensive havens like gold, JPY and CHF. This confirms traders are once again moving to more aggressive stances.
European trading has been mixed with stocks rallying and currencies falling. With a June 23rd date now set for the Brexit vote and politicians picking sides (David Cameron on the stay side and London mayor Boris Johnson on the exit side) the campaign has moved from speculation to reality. GBP has been under pressure as expectations of a close vote increase the odds that the Bank of England is likely to do nothing before July, preferring to stay out of the crossfire. Continental currencies, meanwhile, have also come under pressure on the realization that the EU is unlikely to come through all of this unscathed.
Falling currencies and rising commodities, meanwhile, has helped to boost the FTSE
and the DAX today. Similarly, a falling JPY could help to rebuild interest in Japanese stocks today.
There have been no major announcements after the US close so far today.
Significant announcements released overnight include:
US Markit flash manufacturing PMI 51.0 vs street 52.5
Canada Bloomberg Nanos confidence 53.5 vs previous 52.1
UK CBI total orders (17) vs street (12)
UK CBI selling prices (3) vs street 0
Germany flash manufacturing PMI 50.2 vs stret 51.9
Germany flash service PMI 55.1 vs street 54.7
France flash manufacturing PMI 50.3 vs street 49.9
France flash service PMI 49.8 vs street 50.3
Japan flash manufacturing PMI 50.2 vs street 52.0
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
There are no major announcements scheduled for Asia Pacific countries today.
4:00 pm AEDT Singapore consumer prices street (0.6%)
4:00 pm AEDT Singapore core CPI street 0.5%
7:00 am GMT Germany GDP street 2.1%
7:00 am GMT Germany exports street (0.3%)
7:00 am GMT Germany imports street 0.3%
9:00 am GMT Germany IFO bus climate street 106.8
9:00 am GMT Germany IFO current assessment street 112.0
9:00 am GMT Germany IFO expectations street 101.6
10:00 am EDT US consumer confidence street 97.2
10:00 am EDT US Richmond Fed street 2
10:00 am EDT US existing home sales street 5.33M