Indian Morning Briefing: Asian Markets Mixed Before FOMC Decision; China’s Economic Activity Improved in May

GLOBAL MARKETS 
DJIA         30364.83  -151.91  -0.50% 
Nasdaq       10828.35    19.12   0.18% 
S&P 500       3735.48   -14.15  -0.38% 
FTSE 100      7187.46   -18.35  -0.25% 
Nikkei Stock 26475.64  -154.22  -0.58% 
Hang Seng    21268.54   200.55   0.95% 
Kospi         2468.00   -24.97  -1.00% 
SGX Nifty*   15711.00   -11     -0.07% 
*June contract 
 
USD/JPY 135.20-21   -0.20% 
Range   135.60   134.89 
EUR/USD 1.0441-44   +0.24% 
Range   1.0452   1.0412 
 
CBOT Wheat July $10.502 per bushel 
Spot Gold     $1,809.80/oz   0.1% 
Nymex Crude (NY) $118.25   -$2.68 
 
 
U.S. STOCKS 

The S&P 500 continued its slide on Tuesday, a day after it closed in a bear market for the first time since 2020.

The broad market index fell 14.15 points, or 0.4%, to 3735.48, ending the session lower after it seesawed between gains and losses for much of the day. The Dow Jones Industrial Average dropped 151.91, or 0.5%, to 30364.83. The Nasdaq Composite rose 19.12, or 0.2%, to 10828.35.

The S&P 500 has fallen 9.6% so far in June, its worst performance during the first 10 trading sessions to a month since 2008. It is down 22% from its latest closing record, which it hit in early January.

 
 
ASIAN STOCKS 

Japan’s Nikkei Stock Average was 0.4% lower to 26534.62 on fears over aggressive Fed tightening driven by overnight data showing an acceleration in US producer-price inflation. With the FOMC meeting’s outcome looming later today, the market feels the risks are tilted to further downside in risk assets, said Chris Weston, Head of Research at Pepperstone, in an email. Worst performers included Inpex Corp. falling 3.3%, Sysmex Corp. dropping 2.95% and Nitori Holdings down 2.9%. USD / JPY was at 135.05 compared with 134.64 as of Tuesday’s Tokyo stock market close. The currency pair had earlier touched around 135.59, its highest intraday level since October 1998, according to FactSet.

South Korea’s benchmark Kospi fell 0.7% to 2475.01 in early trade, dragged by losses in defense, airline and entertainment stocks. Foreign investors were net sellers ahead of the Fed’s policy decision later in the day, amid rising expectations for a higher-than-expected rate increase. USD / KRW was 0.4% higher at 1,291.50 on risk aversion. Entertainment company HYBE slumped 26% after its boyband BTS decided to go on hiatus. Aircraft maker Korea Aerospace Industries fell 4.1%. Missile manufacturer LIG Nex1 retreated 3.4%. Hyundai Motor gained 3.5%, rebounding from its recent losses after truckers ended a strike that had crippled operations at the car maker.

Hong Kong’s Hang Seng Index rose 0.9% to 21259.20, boosted by technology stocks following the Nasdaq Composite’s overnight gain. However, the local equity market was likely to range-trade today as investors were expected to keep a wait-and-see stance before the FOMC meeting’s outcome later today, KGI Research said in the morning commentary. Among the HSI’s top performers, Alibaba Health Information Technology climbed 4.4%, JD.com rose 4.1% and Li Ning added 5.0%. The Hang Seng TECH Index was up 2.6% at 4714.48.

Chinese shares were higher in early trade, supported by gains in auto and liquor stocks. The Shanghai Composite Index added 0.3% to 3299.75, the Shenzhen Composite Index rose 0.3% to 2097.09 and the ChiNext Price Index gained 0.9% to 2572.11. Auto stocks were higher, with BYD Co. gaining 0.3% and SAIC Motor adding 1.3%. Among liquor stocks, Kweichow Moutai rose 0.4% and Wuliangye Yibin gained 0.3%.

FOREX 

JPY strengthened against most G-10 and Asian currencies in the early Asian session on a risk-off mood spurred by losses in most regional equity markets, but JPY’s gains may be capped by prospects for the BOJ to maintain its accommodative monetary policy. The BOJ bought a large amount of JGBs on Tuesday and announced an increase in JGB purchases for Wednesday to keep a lid on JGB yields, said SPI Asset Management’s managing partner Stephen Innes in an email, adding this action signaled that the BOJ was intent on not altering policy. USD / JPY fell 0.3% to 135.06 after earlier touching around 135.59, its highest intraday level since October 1998, according to FactSet. SGD / JPY dropped 0.2% to 96.98 and EUR / JPY was down 0.1% at 140.95.

METALS 

Gold prices edged higher ahead of the FOMC meeting’s outcome later today. The FOMC decision will deliver the “moment” for gold traders, said Oanda senior market analyst Edward Moya in an email, noting traders are seeking to calculate how aggressive the Fed will be with raising rates for the rest of the year. Regardless of how hawkish Fed Chairman Powell is at the post-FOMC decision conference, a widening interest-rate differential for USD against its major trading partners will make life difficult for the precious metal over the short-term, Moya added. Spot gold was 0.1% higher at 1,809.80 / oz.

OIL SUMMARY 

Oil prices rebounded after posting mild losses earlier in the Asian morning session, but could fluctuate ahead of the FOMC decision later today, analysts said. While oil traded lower, possibly due to pre-FOMC decision-related profit-taking, OPEC will return as the market’s most significant focus once the anticipated Fed rate increase is in the rear window, said SPI Asset Management’s managing partner Stephen Innes in an email. . OPEC’s monthly oil market report released overnight indicated OPEC didn’t boost its oil production as agreed and output even decreased last month, Innes added. Front-month WTI crude oil futures were 0.3% higher at 119.28 / bbl; front-month Brent crude oil futures gained 0.3% to $ 121.52 / bbl.

 
 
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(END) Dow Jones Newswires

June 14, 2022 23:15 ET (03:15 GMT)

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