- Asian equity bulls catch a breather amid US dollar recovery, pullback in gold.
- Talks of US stimulus, geopolitical headlines join increasing odds of Fed’s dovish message.
- Virus wave 2.0 feared with new cases from the US, China and Europe are on the rise.
- Aussie employment data unexpectedly shrunk, Japanese PPI recovered.
Shares in Asia pare gains while heading into the European open on Tuesday. The rally seems to have taken clues from the US dollar pull back from 22-month low amid hopes of further stimulus from America as policymakers talk the phase 4 fiscal stimulus. Also supporting the risk reset could be the fears of the escalating US-China tension following The Times’ report suggesting increased American aerial presence in the South China Sea. Additionally, North Korean Leader Kim Jong-Un’s preference for nuclear arsenal and blasts in Iraq are certain other catalysts that triggered the pullback in market sentiment.
While portraying the same, the MSCI index of Asia-Pacific shares outside Japan marks 0.99% gains but Japan’s Nikkei 225 fails to justify the upbeat Corporate Service Price Index as declining 0.10%, to 22,685. Though, stocks in China and Hong Kong remain on the front foot with nearly 1.0% gains whereas figures from New Zealand and Indonesia can’t overrule the general trend of flashing mild losses as we write.
Australia’s ASX 200 sheds 0.17% to 6,034 as the Australian Bureau of Statistics said that the Payrolls fall 1.1% between mid-June and mid-July. Furthermore, South Korea’s KOSPI and India’s BSE SENSEX are on the other side of the gain series as markets turn cautious ahead of this week’s Federal Reserve meeting as well as the anticipated announcement on the fiscal package. Further to weigh on the prices, the US senior health official Dr. Anthony Fauci said to remain cautiously optimistic about Moderna’s recently debated coronavirus (COVID-19) vaccine.
It’s worth mentioning that the latest resurgence of the pandemic in China, Australia and the US, not to forget Spain, becomes an additional reason for the global traders to ward off the optimism backed by likely stimulus. It should, additionally, be noted that the US 10-year Treasury yields are on their recovery mode to 0.63%, up 2.4 basis points (bps) on a day while S&P 500 Futures trim day’s gains from 3,246 to currently around 3,231.
While there are no major data/events up for publishing, traders will keep eyes on the qualitative risk catalysts and the US dollar moves for fresh impulse.
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