Global Markets:
- Asian Stock Markets : Nikkei down 1.02%, Shanghai Composite up 0.13%, Hang Seng down 0.50%, ASX down 0.55%
- Commodities : Gold at $1398.55 (+0.12%), Silver at $15.35 (-0.90%), Brent Oil at $64.16 (-0.45%), WTI Oil at $56.82 (-0.44%)
- Rates : US 10-year yield at 2.006, UK 10-year yield at806, Germany 10-year yield at -0.319
News & Data:
- (USD) Philly Fed Manufacturing Index 0.3 vs 10.6 expected
- (GBP) MPC Asset Purchase Facility Votes 0-0-9 vs 0-0-9 expected
- (GBP) Asset Purchase Facility 435B vs 435B expected
- (GBP) Official Bank Rate 0.75% vs 0.75% expected
- (GBP) MPC Official Bank Rate Votes 0-0-9 vs 0-0-9 expected
- (GBP) Retail Sales m/m -0.50% vs -0.50% expected
- Trump Approves Strikes on Iran, but Then Abruptly Pulls Back
- Japan’s core consumer inflation slows in May, keeps pressure on BOJ
Markets Update:
Asian stock markets are mixed on Friday as worries about escalating tensions in the Middle East offset the positive sentiment generated by the overnight gains on Wall Street amid optimism about an interest rate cut by the U.S. Federal Reserve in the future. Tensions between the U.S. and Iran escalated after Iran shot down a U.S. military drone over the Strait of Hormuz. President Donald Trump declined to say whether the U.S. would retaliate against Iran for the shooting, repeatedly saying to media reporters, “You’ll find out.”
The Japanese market is flat in choppy trading, while the safe-haven yen strengthened amid worries about escalating tensions in the Middle East. A preliminary survey of Japanese manufacturers, the IHS Markit flash purchasing managers index showed indicators dropping, with new orders at the lowest level in three years.
China’s Shanghai Composite and the Shenzhen Component bucked the trend to rise 0.1% and 0.3% respectively, supported by the dovish tone by the U.S. Federal Reserve in its latest policy statement, which signalled a possible rate cut. Over in South Korea, the Kospi traded 0.4% lower as shares of LG Chem declined more than 1%. Australia’s S&P/ASX 200 also slipped 0.6%, with shares of biotechnology firm CSL dropping more than 3%.
In currency markets, the prospect of U.S. interest rates being lowered put the dollar squarely on the defensive. The dollar index against a basket of six major currencies fell to a two-week low of 96.495. The index has shed roughly 1% this week. With the Fed expected to ease policy soon, and with other central banks such as the European Central Bank and the Bank of Japan seen following in their wake, government bonds were on a bullish footing. The benchmark 10-year U.S. Treasury yield surged in price and its yield fell below 2% for the first time in 2-1/2 years on Thursday. It last stood at 2.004%.
In oil markets, crude prices dipped following the previous day’s big rally. U.S. crude oil futures were down 0.35% at $56.82 per barrel after surging more than 5% the previous day after Iran shot down the U.S. military drone, raising fears of supply constraints.
Upcoming Events:
- 08:15 AM GMT – (EUR) French Flash Services PMI
- 08:15 AM GMT – (EUR) French Flash Manufacturing PMI
- 08:30 AM GMT – (EUR) German Flash Manufacturing PMI
- 08:30 AM GMT – (EUR) German Flash Services PMI
- 09:00 AM GMT – (EUR) Flash Manufacturing PMI
- 09:00 AM GMT – (EUR) Flash Services PMI
- 09:30 AM GMT – (GBP) Public Sector Net Borrowing
- 01:30 PM GMT – (CAD) Core Retail Sales m/m
- 01:30 PM GMT – (CAD) Retail Sales m/m
- 01:30 PM GMT – (GBP) MPC Member Tenreyro Speaks
- 05:00 PM GMT – (USD) FOMC Member Brainard Speaks
- &more…
