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World News Round up

FX Updates: Japanese Yen Drops by 0.70% Top currency losers are Japanese Yen (-0.70%), Swedish Krona (-0.55%) and Swiss Franc (-0.53%). Gains are led by South Korean Won (0.32%) and Dollar Index (0.28%). In addition, there was a slight change on Euro (-0.19%) and British Pound (-0.14%).

Energy Commodities Updates: Natural Gas EU Dutch TTF Gains by 3.68% Top commodity gainers are Natural Gas EU Dutch TTF (3.68%), Natural gas (3.63%) and Natural Gas UK GBP (3.52%). Biggest losers are Urals Crude Oil (-1.25%) and Methanol (-0.57%). In addition, there was a slight change on Crude Oil WTI (0.92%) and Brent Crude Oil (0.82%).

Metals Commodities Updates: Steel Rebar Gains by 2.53% Top commodity gainers are Steel Rebar (2.53%). Biggest losers are Copper (-0.80%), Platinum (-0.80%) and Gold (-0.57%).

Agricultural Commodities Updates: Cheese Slumps by 9.58% Top commodity losers are Cheese (-9.58%), Cocoa (-5.62%) and Oat (-3.59%). Gains are led by Cotton (0.77%).

New Zealand Producer Inflation Slows in Q1 Producer input prices in New Zealand increased by 0.7 percent quarter-on-quarter in the three months to March of 2024, compared to a 0.9 percent rise in the preceding quarter. The largest input industry contributions were from: electricity and gas supply, up 11.6 percent; meat and meat product manufacturing, down 3.8 percent; and insurance and superannuation funds, up 5.0 percent.

South Korea Jobless Rate Steady in April The seasonally adjusted unemployment rate in South Korea was steady at 2.8% in April 2024. The number of unemployed persons totaled 885 thousand people in April, which increased 81 thousand persons or 10% year-on-year. Meanwhile, the number of employed persons totaled 28.693 million persons in April, which went up 261 thousand persons or 0.9% from a year earlier. The labor force participation rate stood at 65.0% in April, up by 0.6% from the same period last year.

Singapore NODX Drops Less than Expected Singapore's non-oil domestic exports (NODX) fell 9.3% yoy in April 2024, after a marginally revised 20.8% plunge in the prior month, compared to market forecasts of a 10% drop. It marked the third straight month of decline in NODX. On a seasonally adjusted basis, NODX grew 7.6% in April 2023, the most in seven months, rebounding sharply from an upwardly revised 8.5% fall in March, which was the steepest fall in 10 months, but below market expectations of a 7.9% gain.

Japanese Shares Fall as Tech Stocks Retreat The Nikkei 225 Index fell 0.9% to below 38,600 while the broader Topix Index lost 0.2% to 2,732 on Friday, reversing gains from the previous session, with technology stocks leading the retreat. Japanese shares also took cues from a weak lead on Wall Street overnight as some profit-taking hit the market following a rally to record highs. Meanwhile, data earlier this week showed that Japan’s economy contracted at an annualized 2% in the first quarter of 2024, coming in worse than market expectations for a 1.5% contraction as private consumption fell for the fourth straight quarter. Losses in the technology sector were led by Tokyo Electron (-2.2%), Disco Corp (0.6%), SoftBank Group (-1.2%), Socionext (-1.5%) and Recruit Holdings (-1.4%). Other index heavyweights also tumbled, including Nintendo (-1.5%), Shin-Etsu Chemical (-1.7%) and Sony Group (0.6%). Still, the benchmark indexes are on track to end the week with gains.

Oil Set for Weekly Advance WTI crude futures firmed above $79 per barrel on Friday and were set to finish the week with gains, underpinned by recent declines in US crude oil inventories and growing optimism that the US Federal Reserve will cut interest rates this year. EIA data showed that US crude stockpiles fell by 2.508 million barrels last week, declining for the second straight week and exceeding forecasts for a 1.362 million barrel draw. April data also pointed to slowing US consumer inflation, boosting rate cut expectations from the Fed that could bolster economic growth and energy demand. Meanwhile, the International Energy Agency slashed its global demand growth forecast for this year by 140,000 barrels per day to 1.1 million. Elsewhere, the latest OPEC report indicated that member countries exceeded their production cap by 568,000 barrels per day in April, but maintained solid demand projections of 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025.

Gold Steady as Investors Mull US Data Gold held steady near $2,380 per ounce on Friday, as investors continued to assess the mixed US economic data and its impact on Fed’s monetary direction. Latest data showed a decrease in initial jobless claims, higher-than-anticipated import and export prices, and disappointing housing starts and building permits. At the same time, Fed Bank of New York President Williams stated that more evidence is needed before considering adjustments to interest rates. Recently, slowing US consumer inflation and stable retail sales raised expectations for the Fed to deliver at least two rate cuts this year. Investors are now betting on around a 69% chance of a Fed rate reduction in September. Over the week, the bullion is on track for a second consecutive weekly gain.

Bonds Update: New Zealand 10Y Bond Yield Gains by 3 bps Government bond yields are trading higher on Friday. Top gainers are New Zealand 10Y (3.41bps), Japan 10Y (0.90bps) and US 10Y (0.38bps). Biggest losers are Australia 10Y (-1.40bps) and South Korea 10Y (-0.60bps).

Dollar Heads for Weekly Drop as Inflation Slows The dollar index rose for a second straight day to above 104.5 on Friday, but was still set to decline for the week as signs of cooling inflation and slowing momentum for the broader economy reinforced expectations for Federal Reserve interest rate cuts this year. Data released on Wednesday showed that US consumer inflation data came in line with expectations in April, but were lower than the month before, while retail sales stagnated. Meanwhile, investors digested mixed economic numbers on Thursday, with initial jobless claims fell roughly in line with forecasts, import and export prices rose more than anticipated, housing starts and building permits disappointed and industrial production unexpectedly stalled. Meanwhile, traders awaited more signals from Fed officials as policymakers called for caution before moving to cut rates. The dollar is on track for weekly falls against most major currencies, but was flat versus the yen and the yuan.

Hang Seng Falls Slightly But Points to 4th Straight Weekly Rise Shares in Hong Kong fell 30 points or 0.16% to 19,411 on Friday morning session, shifting from a rally in the prior session as traders reacted to mixed activity data in China. Official figures showed that industrial output growth beat forecasts in April but retail sales rose the least in 15 months. Also, fixed investment expanded less than expected during the first four months of the year. Still, the Hang Seng is heading for the fourth straight gain for the week, jumping over 2% to stay at its highest level in over nine months, boosted by multiple support measures from the policymakers in Beijing and Hong Kong.

Chinese Yuan Falters After Mixed Data The offshore yuan depreciated to around 7.23 per dollar, following a recent peak to two-week highs on May 16th, as traders responded to mixed economic data from China. The latest figures revealed that industrial production in April grew more than anticipated, while retail sales rose less-than-expected. While government stimulus aimed at boosting production has shown effectiveness, initiatives targeting consumer spending, such as appliance trade-in programs and tax relief measures, are lagging behind. Adding to the concerns, data indicated a further decline in real estate investment for the period of January to April, raising concerns about the effectiveness of China's property rescue plan. Nervous consumers, wary of the sustained downturn in the real estate sector, may remain hesitant to engage with the government's initiatives aimed at stabilizing the property market.

FX Updates: South Korean Won Drops by 0.64% Top currency losers are South Korean Won (-0.64%). In addition, there was a slight change on Dollar Index (0.11%), Japanese Yen (-0.24%), Euro (-0.09%) and British Pound (-0.09%).

India Shares Head for Strong Weekly Gains The BSE Sensex advanced 258.8 points or 0.3% to 73,922.6 in early deals on Friday, up for the second straight session, supported by gains from tech, consumer goods, and healthcare. For the week, the BSE Sensex is heading for a 1.7% surge after falling in the prior week, as signs of cooling inflation and a softening US economy raised the prospect of rate cuts. Investors anticipate China benchmark lending rates for May fixing next week and monitoring the first auctioned China's 30-year bond today as Beijing efforts' to stimulate a flagging economy. Limiting the gain was mixed data from China after the latest data in India's top trading partner showed industrial output rose more than expected, but retail sales and fixed investment growth below forecasts.

European Markets Set for Lower Open European equity markets were headed for a lower open on Friday, extending losses from the previous session, as traders digest prospects the Fed will probably keep interest rates higher for longer and mixed economic data coming out of China. Meanwhile, investors will assess the final euro zone inflation reading for April. On the corporate front, markets will closely watch HSBC, after reports showed that top shareholder Ping An is considering options to lower its 8% stake. Also, earnings are set to come from Richemont and Engie. Euro Stoxx 50 shed 0.30% in premarket trade.

Copper Hovers Close to Record High Copper futures rose to the $4.95 per pound mark, remaining close to record-high $5.13 touched on May 15th as robust demand and tight output raised concerns of supply deficits. China’s industrial production expanded by 6.7% in April, showing that strong export demand for Chinese manufactured goods is sustaining copper demand from the world’s top consumer. Additionally, long-term growth forecasts remained ambitious due to copper’s key role in electrification, from electrical vehicle charging to grid-scale energy storage and data-center infrastructure. In turn, the low availability of material hampered margins for smelters in China, responsible for over half of global supply, and pressured their output.

South African Stocks Edge Down The JSE index was slightly down on Friday, trading below the 79,100 level, on some profit-taking after two consecutive sessions of advances. Investors continued to assess the outlook for interest rates, while also digesting cautious comments from Fed officials regarding eventual policy easing. Resource-linked stocks and tech companies were among the hardest hit. Meanwhile, luxury goods holding company Richemont surged over 4%, moving to the top of the index, after appointing Nicolas Bos, CEO of Van Cleef.

Russia Stocks Cautious ahead of Inlfation Print and GDP The ruble-based MOEX Russia index traded muted at 3,490 on Friday, as investors positioned themselves for preliminary GDP results and monthly inflation reading due after the closing bell. They also followed the events from the second day of Putin's visit to China. On the corporate front, the leaders of growth were NorNickel (2.7%), PIK (2.7%), GLTR (91.3%), MMK (1.3%), and Aeroflot (1.2%). NorNickel benefited from higher nickel prices since unrest continued in New Caledonia mining region. Meanwhile, losses were seen by MKB (-1.8%), Ros Agro (-1.1%), Gazprom (-1.1%), and Tatneft (-0.9%). Markets also remained attentive to Rosseti, which would be holding the meeting to decide on dividends. Weekly, the index was poised for 1.2% gain. The IPO boom, improved quarterly results, and return to dividends offset worries over tight-for-longer monetary policy by CBR.