Wednesday, April 8, 2020

Asia Times: Aussie advances on Tuesday after RBA signals possible taper in bond purchases

Tags
  • Gold
  • Yen
  • Stocks
  • Oil
  • AUD
  • RBA

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Market Recap: Aussie advances on Tuesday after RBA signals possible taper in bond purchases

Stocks on Wall Street dropped late into Tuesday's trading session, erasing any gains made earlier that trading session to inch slightly lower from Monday's close. The decline late in Tuesday's trading session was likely a result of US stocks normalising back towards its moving average as optimism in the financial market as a result of the US government's US$2tn stimulus package and plateauing infections in some of the worst hit areas in the US start to ease. The materials sector was the best performing among S&P500 sectors, rising 2.42% with the energy sector close behind, advancing 2.00%.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones -0.12% -26.13 22,653.86
S&P500 -0.16% -4.27 2,659.41
Nasdaq -0.33% -25.98 7,887.26
*Source: Bloomberg

The dollar fell against major currencies on Tuesday, after risk aversion eased in the European market. Italy and Norway signalled that they were looking at progressively easing their respective lockdowns as the number of new cases and deaths in both countries start to slow down.

The Australian dollar was the best performing among major currencies, surging against the greenback after the RBA's monetary policy decision earlier on Tuesday. In the RBA's statement following its monetary policy meeting, the central bank signalled that it will consider reducing bond purchases should conditions in the market continue to improve, after leaving its cash rate unchanged as expected.

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Safe haven assets mostly rose as optimism started to fade in financial markets. Gold fell slightly after four straight sessions of gains. Yen advanced together with shorter-term US Treasuries, while longer-term US Treasuries fell, pushing benchmark 10-year yields 4.2bps higher to 0.71%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold -0.80% -13.25 1,647.72
Silver +0.11% +0.02 14.89
JPY +0.42% +0.46 108.76
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year -0.2 0.26%
10-Year +4.2 0.71%
30-Year +1.6 1.29%
*Source: Bloomberg

Oil futures dropped on Tuesday, ahead of an OPEC+ meeting on April 9th as investors start to fear that a production cut from the bloc may not be enough to save oil prices amid a sharp decline in demand for energy as multiple countries across the world are already in lockdown. The Energy Information Administration said that it expects output for the US to fall by 1mn barrels per day for 2020, highlighting the damage that lower oil prices have on US oil producers. Brent dropped more than 3% while WTI crude oil futures sank 9.39% on Tuesday.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -3.57% -1.18 31.87
WTI Crude -9.39% -2.45 23.63
*Source: Bloomberg

Asian equities look set to track losses in the US on Wednesday morning, with the Nikkei, KOSPI and ASX200 falling in the first hour of the trading session. Futures tracking major US indices were also lower, signalling that stocks in the US may fall for the second day in a row.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -0.80% -152.09 18,798.09 8:43:30 AM
KOSPI Index -0.59% -10.75 1,812.85 9:03:30 AM
ASX200 Index -1.28% -66.98 5,185.30 9:03:06 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures -0.75% -168.00 22,323.00 8:53:36 AM
S&P500 Futures -0.52% -13.75 2,628.25 8:53:36 AM
Nasdaq Futures -0.39% -31.25 7,980.75 8:53:36 AM
*Source: Bloomberg

Economic releases for the day ahead include (all timings in GMT +8):

  • Switzerland Mar Unemployment Rate (1.45pm)
  • US Apr 3 Mortgage Applications (7pm)
  • Canada Mar Housing Starts (8.15pm)