Stocks
Asian stocks extend gains, dollar dips as US data builds on rate hope
Asian equities rose and the dollar slipped further on Thursday as investors welcomed more data pointing to a softening labour market that gives the Federal Reserve room to cut interest rates, with another key jobs report due later in the day.
The advances tracked another record on Wall Street on a holiday-shortened day, while national elections in Britain and France are also on the radar over the next few days.
After a recent poor run for stocks, the mood on trading floors has lightened this week thanks to figures indicating the US labour market was tightening and inflation retreating.
On Wednesday, figures showed the private sector created fewer jobs than expected last month, while first-time and continuing claims for jobless benefits also topped forecasts.
Also, a survey showed services sector activity contracted in June at the fastest pace in four years.
That all came after news Friday that the personal consumption expenditures (PCE) index — the Fed’s preferred gauge of prices — had dipped further in May.
Adding to the feel-good factor were comments this week from Fed chief Jerome Powell, who said the battle against inflation had made “progress” and “substantial” work had been done on softening the labour market.
Markets are pricing in nearly two rate reductions this year, starting in November.
Still, minutes from the central bank’s June policy meeting showed officials remained cautious about cutting too soon and wanted to see more evidence prices were under control.
While inflation remains sticky and is tempering expectations, softening data in May “adds to our growing confidence that price rises won’t reaccelerate from here”, said Henk-Jan Rikkerink, of Fidelity International.
“The range of outcomes when it comes to the magnitude of potential rate cuts by the Fed have narrowed significantly since the start of the year.
“We think that the bar for the cutting cycle to start remains high but recent progress on the inflation front has been encouraging.”
On Wall Street, the Dow ended slightly lower, but the S&P 500 and Nasdaq chalked up more record highs.
And the gains filtered through to most of Asia, with Tokyo, Hong Kong, Sydney, Seoul, Taipei, Manila and Jakarta ascending.
Shanghai, however, bucked the trend again, with traders still on edge about the state of the world’s number two economy.
Zhiwei Zhang at Pinpoint Asset Management warned “people don’t have strong confidence in economic outlook. Stronger policy support would help, from both monetary and fiscal fronts. China has a high real interest rate and a conservative fiscal policy stance for now”.
And Capital Economics’ Thomas Mathews said there were concerns among Chinese investors domestically and globally, and while they could ease over time “Chinese equities seem set to go their own way for a while yet”.
The dollar dipped further against its major peers after the jobs readings, with the euro getting a little help from news that more than 200 centrist and left-wing candidates had pulled out of Sunday’s legislative election runoff in France in a bid to beat the far right.
President Emmanuel Macron hopes the move will unify the vote and thus block the far-right National Rally (RN) of Marine Le Pen from gaining power after it saw massive gains in the first round Sunday.
However, analysts warned that the country — the second biggest economy in the European Union — could be headed for a period of political deadlock if there is no overall winner in the polls.
The pound was enjoying support ahead of Thursday’s general election, which is expected to see the opposition Labour Party win a landslide against the ruling Conservatives after 14 years in government.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.2 percent at 40,666.78 (break)
Hong Kong – Hang Seng Index: UP 0.2 percent at 18,015.49
Shanghai – Composite: DOWN 0.2 percent at 2,975.23
Euro/dollar: UP at $1.0792 from $1.0786 on Wednesday
Pound/dollar: UP at $1.2752 from $1.2737
Dollar/yen: DOWN at 161.37 yen from 161.52 yen
Euro/pound: DOWN at 84.63 pence from 84.65 pence
West Texas Intermediate: DOWN 0.5 percent at $83.47 per barrel
Brent North Sea Crude: DOWN 0.5 percent at $86.94 per barrel
New York – Dow: DOWN 0.1 percent at 39,308.00 (close)
London – FTSE 100: UP 0.6 percent at 8,171.12 (close)
Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent hike of 620 points, reaching a closing value of 18,352 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, gaining 107 point to settle at 5,567 points. Meanwhile, DJIA Index experienced a notable hike, adding 225 points during the week and concluding at 39,375 points after a week of gaining.
In contrast, Russell 3000 Index saw a gain in week performance, with a slight hike of 51 points to reach 3,150 points by the end of the week.
Moving to Russell 2000 Index, demonstrated a notable drop of 21 points, ending the week at 2,026 points.
In the Outgoing week, the European stock market displayed a gaining performance.
Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a gain of 5.18 points to close at 516.60.
The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant hike, adding 39 points or finishing the session at 8,203.
In Germany, the DAX 30 index, added by 240 points to reach 18,475, while France’s CAC 159 increased by 196 points to stop at 7,675 at the end of the trading day.
Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, increased by 833 points to 33,987. However, Spain’s IBEX 35, added by 80 points, to close at 11,023.
A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has added 964 points during the week. At the end of the week, the index stood at 79,996 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange gained by 313 points last week. At the end of the week, the index stood at 24,323 points.
Pakistan Stock Exchange Index ‘KSE 100’, shed 194 points last week. After a week of losing, the index settled at 78.863 points.
On the other hand, The Sri Lankan stock market index adds, and the Colombo Stock Exchange index ‘ASPI’ decreased by 124 points in a week. After a week the index settled at 11,947 points.
Bhutan’s stock market index ‘BSI’ lost 15 points hence the index stood at 1,520 points throughout the whole week. Nepal’s ‘NEPSE’ added 68 points, therefore the index stands at 2,119 points.
Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ gained by 142.15 points or 2.65 percent, in the outgoing week. At the end of the week, the index stands at 5,497 points.
