Global Markets Report - 20 June
Australian shares look set to open higher as Wall Street remained closed for a public holiday.
Australia
Australian shares are on track to edge higher at the open as investors wait to see whether the minutes from the Reserve Bank's most recent board meeting shed any light on the likely path for interest rates.
ASX futures are up by 0.2% amid light trade, with US markets having been closed at the start of the week for a public holiday.
The RBA is scheduled to publish the minutes from its June meeting, at which it raised the cash rate by 25 basis points to 4.10%, during Tuesday's session.
The pan-continental Stoxx Europe 600 declined 1% Monday. Asian stocks broadly fell, with Japan's Nikkei 225 retreating 1%, and Chinese shares also declining. US markets were closed for a public holiday and major index futures inched down.
In commodity markets, Brent crude backtracked 0.7% to $76.07 a barrel, while gold climbed to US$1,951.83.
The 2 year Australian government bonds yield climbed to 4.22% and the 10 Year yield edged up to 4.04%. The 2 year US Treasury yield held steady at 4.71% and the 10 Year yield is 3.76%.
The Australian dollar edged down to 68.51 US cents.
Asia
Chinese stocks drifted lower, as investors dialed back expectations of what measures Beijing might take to support the economy. The CSI 300 index of mainland Chinese stocks slipped 0.8%.
Hong Kong shares finished the day lower, despite clawing back some ground in the final hour of trading after the US said its secretary of state would meet with Chinese President Xi Jinping later on Monday. The Hang Seng Index ended 0.6% lower at 19912.89, with tech and consumption stocks leading the losses.
Japan's Nikkei Stock Average fell 1.0% to close at 33370.42 in a likely technical correction following 10 straight weeks of gains. This appears to be time for a correction, says Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in an email, noting that some equity markets look overbought. The worst performers on the Japanese benchmark index included Toyota Tsusho, which slipped 4.4%, Lasertec, which dropped 4.2%, and Advantest, which was down 3.2%. USD/JPY was at 141.62, compared with 140.65 around Friday's Tokyo stock-market close. The 10-year JGB yield was down 1bp at 0.390%.
India's benchmark Sensex closed 0.3% lower at 63168.30 as lenders weighed. Traders are likely to focus on FOMC Chair Jerome Powell's semi-annual testimony on monetary policy this week, UOB analysts say in a note.
Europe
European stocks dropped, with investors pausing for reflection as Wall Street stays closed and ahead of the Bank of England's interest rate-setting decision Thursday.
The Stoxx Europe 600, DAX and CAC 40 fell 1% and the FTSE 100 retreated 0.7%.
"It's been a quiet start to the week, with stocks edging lower in light trade due to the U.S. bank holiday," Craig Erlam at OANDA wrote.
"Now it's up to the BOE to continue its firefighting mission; one that's at risk of getting out of control despite the MPC's efforts to contain it. Of all the major economies desperately trying to control inflation while providing a soft landing, the UK looks least likely to achieve it."
North America
US markets were closed for a public holiday and major index futures inched down.
Stocks have rallied in recent days, with the S&P 500 rising 2.6% last week to notch its biggest weekly gain since late March. Earlier this month, the broad index climbed into a new bull market, as optimism about a boom in artificial intelligence boosted big technology stocks and traders bet the Federal Reserve was nearly done raising interest rates.
Investors are now awaiting more signals from Federal Reserve Chairman Jerome Powell, who is set to testify before Congress on Wednesday and Thursday.
Also coming up are FedEx earnings on Tuesday and data on global manufacturing and services activity on Friday, which will be scrutinized as indicators of economic health.