Stock markets sold off across Asia, with the JPN225 underperforming and losing more than -2%. US futures are higher, as are European futures, as markets watch efforts to prevent a further escalation and widening of the Israel-Hamas conflict. Asian markets were still weighed down by heightened risk aversion, but European and US markets show signs of stabilisation. Treasury yields have backed up 5.8 bp to 4.67% and the 10-year Bund yield jumped 2.6 bp, after JGB rates climbed 1.2 bp as haven flows receded. Eurozone spreads are narrowing.
- USDIndex has declined to 106.54 but is currently on a pull back to 106.20. The Kiwi rose 0.71% to 0.5926.
- The ECB is expected to keep rates steady through the first half of 2024. According to the latest Bloomberg survey, the central bank won’t start cutting rates until the second half of next year, with the first cut seen in September, followed by another in October. Compared to the previous survey respondents have pushed out rate cut expectations, which ties in with recent ECB comments suggesting that the outlook may not become clearer until March.
- Stocks: The UK100 added 0.1%, FRA40 and GER40 both lost 0.1%. US500 and those tracking the tech-heavy US100 both advanced 0.2% ahead of the New York open. Tech stocks led declines in Europe’s Stoxx 600 index after Bloomberg reported that the US is considering further restrictions to curb China’s access to advanced semiconductors. Polish stocks jumped the most since May 2022 and the zloty rallied as a bloc of pro-European opposition parties appeared on track to unseat the nationalist government.
- USOIL steadied within $85.60- $86.75, as the US ratchets up efforts to prevent the crisis from becoming a full-blown, regional conflagration.
- Gold corrected to 1908 (PP), after it climbed 3.17% to $1990, the highest since mid-September as implied Fed funds futures repriced for about a 30% risk of another hike, after spiking briefly to 50/50 after hotter CPI.
Interesting Mover: BTCUSD (+2.11%) jumped to 27957, on USD pullback. Next resistance is at October’s upper swings, 28100 and 28500.
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Andria Pichidi
Market Analyst
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