Moving markets today: Asian stocks follow Wall Street’s record rally; oil and gold prices rise; focus shifts to US retail sales, Fed speeches, UK inflation, and BOE policy
The week kicked off positively on Wall Street, where stocks surged to reach a new record high driven by strong gains in major technology companies. Asian markets mirrored this optimism as they followed Wall Street’s lead, anticipating speeches later in the day from various Federal Reserve officials. Oil prices continued to rise, building on previous gains, thanks to improved demand outlooks and investor confidence that OPEC+ might reconsider plans to increase oil supplies in the latter part of the year. Gold prices also edged higher as US Treasury yields softened. Bank of Japan Governor Kazuo Ueda hinted at the possibility of raising interest rates next month. Concurrently, China retaliated against recent trade tensions by launching an anti-dumping investigation into pork imports from Europe. Looking ahead, investors are focused on upcoming US economic data including industrial production and retail sales figures for May, as well as speeches by key Federal Reserve policymakers. Despite declines in British stocks on Monday, market futures suggest a positive start for Tuesday’s trading session. Investors are particularly attentive to Wednesday’s release of the consumer price index (CPI) data and the Bank of England’s forthcoming monetary policy meeting scheduled for Thursday. Here are five key takeaways for your day.
Philadelphia Fed’s Patrick Harker forecasts one rate cut in 2024
Patrick Harker, the president of the Philadelphia Federal Reserve, mentioned on Monday that he sees one interest rate cut as suitable by the year’s end, provided the US economy follows his expectations. This view corresponds with the overall sentiment among members of the Federal Open Market Committee (FOMC), who, based on their recent “dot plot” projections released last Wednesday, indicated they are anticipating a single rate cut in the current year.
BOJ‘s Ueda: July rate hike possible depending on data
Bank of Japan Governor Kazuo Ueda said that the central bank might increase interest rates next month, contingent on the economic and price data available at that time. “Our decision on bond-buying taper and interest rate hikes are two different things,” Ueda told parliament. “There’s a chance we could raise interest rates at our next policy meeting, depending on economic, price and financial data and information available at the time,” he said.
China retaliates with anti-dumping investigation on European pork imports
China has initiated an anti-dumping investigation into pork imports from the European Union, particularly targeting Spain, the Netherlands, and Denmark. This move is seen as a response to EU restrictions on Chinese electric vehicle exports.
Announced by China’s commerce ministry on Monday, the investigation will focus on pork products for human consumption, including fresh, cold, and frozen cuts, as well as pig intestines, bladders, and stomachs, starting June 17.
This action follows the European Commission’s June 12 decision to impose anti-subsidy duties of up to 38.1 per cent on Chinese car imports from July, prompting global food companies to brace for potential retaliatory tariffs from China.
What’s on the radar
This week, central banks in Norway, the UK, and Switzerland are holding meetings. Predictions suggest that Norway and the UK will keep their interest rates unchanged, while the Swiss National Bank is likely to cut rates by another 25 basis points. In Germany, the ZEW Institute will release its June economic confidence survey.
In the United States, six Federal Reserve officials are scheduled to speak on Tuesday, which might provide more details about the future direction of US interest rates following last week’s policy announcement.
Asian markets climb on Wall Street gains
The S&P 500 closed 0.77 per cent higher at 5,473.23 points, while the Nasdaq Composite gained 0.95 per cent to reach 17,857.02. The Dow Jones Industrial Average also rose, ending the day 0.49 per cent up at 38,778.10 points.
Technology and consumer discretionary sectors led the gains among the 11 S&P 500 sector indexes, whereas real estate and utilities saw the biggest declines. Apple’s stock climbed nearly 2 per cent, and Microsoft saw a 1.3 per cent increase.
In Asia, major stock markets opened with gains, following record highs in US markets on Monday. Taiwan and South Korea were the top performers in the region. South Korea’s Kospi index went up by 0.9 per cent, bringing its total gains for the year to 4.3 per cent, with Kumho Engineering & Construction and Korea Petroleum leading the charge.
Japan’s Nikkei N225 rose by 0.97 per cent, Hong Kong’s Hang Seng Index inched up by 0.20 per cent, and China’s CSI300 increased by 0.17 per cent.
Easing concerns about political instability in Europe boosted market sentiment, causing EUROSTOXX 50 futures to climb 0.29 per cent, recovering some of last week’s losses. FTSE futures also saw a 0.36 per cent rise.
In the commodities market, oil prices edged higher on the back of a strong demand outlook and optimism that OPEC+ might halt or reverse its plans to increase supply in the fourth quarter. Brent crude futures were up 0.11 per cent, trading at $84.34 per barrel, and US West Texas Intermediate crude futures held steady at $80.34 per barrel.
Spot gold also saw a modest increase, rising 0.13 per cent to $2,321.99 an ounce.