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Asia stocks surge to three-week highs

Thursday, June 20, 2024

Today’s headlines

What’s happening: Asian stocks recorded sharp gains on Wednesday, amid a surge in tech shares.

What happened: Stocks in the Asian markets jumped to their strongest levels in three weeks, with Hong Kong equities leading the gains.

Shares in Asia mirrored the rise in US stock indices, which reached new highs in the prior session.

Why it matters: Weaker-than-expected retail sales data from the US triggered speculations of the Federal Reserve reducing interest rates at its September meeting, which exerted pressure on the greenback on Wednesday.

Retail sales grew by 0.1% in May, following a 0.2% decline in April. The figure came in lower than market expectations of 0.3% growth, signalling lacklustre economic activity. Expectations of rate cuts by the Fed lent support to US equities.

The S&P 500 and Nasdaq 100 surged to record highs on Tuesday, with Nvidia overtaking Microsoft to become the most valuable company in the world. US stock markets remained closed on Wednesday for the Juneteenth holiday.

Investors in Asia monitored trade data out of Japan, with exports surpassing market expectations. Exports grew by 13.5% year-over-year in May, topping estimates of a 13% surge. Imports rose 9.5%, versus expectations of 10.4%.

Although Japan’s Reuters Tankan sentiment index for manufacturers declined to 6 in June, recording the weakest level in four months, business confidence among non-manufacturers surged to a reading of 31 in June, in the previous month.

MSCI’s broadest index of Asia-Pacific shares, ex-Japan, jumped 1.24% to close at 572.80 on Wednesday, with tech stocks hitting a record high.

Japan’s Nikkei 225 gained 0.23% to close at 38,570.76 on Wednesday, while Hong Kong’s Hang Seng index surged 2.87% to settle at 18,430.39 amid a surge in energy and basic material stocks. India’s BSE Sensex gained 0.05% to 77,337.59.

China’s Shanghai Composite bucked the trend and fell 0.4% to settle at 3,018.05.

What to watch: Investors await the release of economic data on inflation and composite PMI from Japan on Friday. The core consumer price index in Japan, which increased 2.2% year-over-year in April, is expected to rise by 2.6% in May. The au Jibun Bank Japan composite PMI is projected to decline slightly to 52.5 in June, from May’s reading of 52.6. Data on manufacturing and services PMIs from India will also remain in focus.

The markets today

The Canadian dollar will be in focus ahead of new home prices data

Context: The CAD/USD forex pair edged higher on Wednesday, recovering from a five-week low on June 7.

Details: The CAD/USD forex pair fell to a five-week low of 1.376 on June 7 but rebounded slightly on Wednesday amid some weakness in the US dollar and higher foreign currency inflows.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 105.25 on Wednesday, lending support to the loonie.

Investors also assessed comments from Bank of Canada’s officials regarding their monetary policy. BoC Governor Tiff Macklem signalling further interest rate cuts this year weighed on the Canadian dollar.

The CAD/USD forex pair rose around 0.1% to 1.3708 on Wednesday. The S&P/TSX Composite Index fell 0.44% to close at 21,516.90.

What to watch: Investors await the release of economic data on new housing prices from Canada today. New home prices in Canada, which rose 0.2% in April, are expected to increase by 0.2% in May. Analysts expect house price index rising 0.1% year-over-year in May, following a 0.1% decline in April.

Other Markets: European indices closed mostly lower on Wednesday, with the DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.35%, 0.77% and 0.17%, respectively, and the FTSE 100 up by 0.17%.

The news shaping the markets

Russian President Vladimir Putin and North Korea’s Kim Jong Un announced a comprehensive strategic partnership treaty during Putin’s visit to Pyongyang. The news sent the RUB/USD pair higher in forex trading this morning.


New Zealand’s economy grew by 0.2% in the first quarter, after a 0.1% contraction in the prior period. The latest reading topping market estimates of stagnation lent support to the NZD/USD forex pair.


The People’s Bank of China held its key lending rates, in-line with market estimates, which sent the CNY/USD pair slightly lower in forex trading this morning.


Argentina’s retail sales rose by 161% year-over-year at current prices in April. However, this marked an easing from the 208.8% surge recording a month ago and exerted pressure on the ARS/USD forex pair.


Eurozone’s construction output declined 1.1% year-over-year in April, after a 0.7% contraction in the prior month, sending the EUR/USD pair slightly lower in forex trading this morning.

What else to watch today

Eurozone’s consumer confidence, European Central Bank’s General Council Meeting and European Union new passenger car registrations, Germany’s producer price inflation, Turkey’s consumer confidence indicator, total motor vehicles production, total vehicle sales, government debt and central government budget balance, Indonesia’s value of loans and Bank of Indonesia interest rate decision, Italy’s construction output, South Africa’s value for building plans passed, Bank of England’s interest rate decision, Mexico’s retail sales, US building permits, current account, housing starts, initial jobless claims, Philadelphia Fed manufacturing index, continuing jobless claims, crude oil stocks change, gasoline stocks change and distillate stocks, China’s foreign direct investment, as well as Spain’s consumer confidence indicator.


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