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Indian Morning Briefing: Asian Markets Mixed; Hong Kong Continues Selling U.S. Dollars to Defend Currency Peg

DJIA*              29888.78    -38.29    -0.13% 
Nasdaq*            10798.35    152.25     1.43% 
S&P 500*            3674.84      8.07     0.22% 
FTSE 100            7121.81    105.56     1.50% 
Nikkei Stock       26245.50    474.28     1.84% 
Hang Seng          21414.90    250.99     1.19% 
Kospi               2403.82     12.79     0.53% 
SGX Nifty#         15403.00     +41.0     0.27% 
#June contract 
USD/JPY     135.04-05   -0.03% 
Range       135.22   134.95 
EUR/USD     1.0532-35   +0.22% 
Range       1.0544   1.0509 
CBOT Wheat July* $10.342 per bushel 
Spot Gold  $1,841.33/oz  0.2% 
Nymex Crude (NY)*  $110.03 -$7.56 
*Markets in the U.S. were closed Monday for the Juneteenth public holiday. 

U.S. markets were closed Monday for the Juneteenth public holiday.

European markets rose as investors remained positive in the absence of U.S. trading. The Stoxx Europe 600 was up 0.96 %, the DAX gained 1.06% , the FTSE 100 advanced 1.50% and the CAC 40 was up 0.64%. "The FTSE 100 and other European markets have moved up a touch this afternoon, taking advantage of a U.S. holiday," IG analyst Chris Beauchamp said in a note. "Heavyweight U.S. markets are out of the picture for the day, which at least removes the risk of any fresh selling in tech stocks for a few hours."


Japan's Nikkei Stock Average was 1.3% higher at 26112.40 in morning trade, supported by gains in auto stocks. The Nikkei 225 may recover to 30000 in the next six to 12 months, assuming that global inflation eases and there is a gradual economic recovery from year's end, Citi analysts said in a note. Positive catalysts include a strong likelihood that Japan's monetary policy remains more accommodative than elsewhere and a potential significant recovery in domestic demand as the pandemic eases, they noted. USD/JPY was at 135.13 versus 134.99 as of Monday's Tokyo stock-market close.

South Korea's benchmark Kospi edged up 0.1% to 2394.14 in mixed early trade. Internet and online-gaming stocks were higher, while defense and airline shares fell. The rebound in European stocks overnight was helping to support investor sentiment, but jitters about inflation and slower economic growth were capping the upbeat mood.

Hong Kong stocks were higher in morning trade, extending a slight recovery trend since Monday from broad losses last week. The benchmark Hang Seng Index was 0.5% higher at 21281.33. The market may find some support in China's latest move to keep its relatively loose monetary policy, KGI Securities analysts said. But with a strong dollar and high U.S. treasury yields, both of which could draw funding away from Asian equities, KGI reckoned any significant breakthrough for HSI is unlikely for now.

Chinese shares were lower in early trade amid concerns over a Covid-19 flareup in the country's tech hub in Shenzhen. The Shanghai Composite Index inched 0.1% lower to 3311.97, the Shenzhen Composite Index declined 0.5% to 2148.37 and the ChiNext Price Index dropped 1.0% to 2684.51. Auto stocks are lower amid worries that Shenzhen has gone into a limited lockdown. Near-term sentiment may be supported by the Chinese government's efforts to stabilize economic growth as it kept benchmark lending rates steady, in contrast to many other countries that are tightening monetary policy to combat inflation, KGI Securities analysts said in a note.


Market expectations for further interest-rate rises by the Bank of England were cushioning sterling against a number of negative factors, including the grim U.K. economic outlook, ING said. Some risks remain that the market will scale back those expectations, but for now that may only come from any explicit pushback from BOE officials speaking this week, analysts at the Dutch bank said. "That's because on the data side we could see yet another modest acceleration in headline inflation, while the core rate may stay above 6.0%," the analysts said. The U.K.'s inflation data for May are due on Wednesday. GBP/USD rose 0.3% to 1.2256, but EUR/GBP gained 0.2% to 0.8602.


Gold prices were higher in early Asian trade, supported by some safe-haven demand amid current macroeconomic uncertainties. Investors will likely keep a close watch on U.S. Fed Chairman Powell, who is due to testify before lawmakers later this week, where he will outline his views on inflation. Spot gold was 0.2% higher at $1,841.33/oz.


Oil prices were higher in early Asian trade, amid some tightness in the global oil market. Recent Chinese data showing record oil imports for May suggests that demand remains strong, Oanda's senior analyst Jeffrey Halley said in a note. "That remains so around the world, and the squeeze on refined products like diesel and gasoline remain as tight as ever," he added. Focus will likely be on U.S. Fed Chair Powell, who is due to testify before lawmakers later this week, where he will outline his view on inflation. Front-month WTI crude oil futures were 1.8% higher at $111.51/bbl, while Brent rose 1.1% to $115.39/bbl.

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(END) Dow Jones Newswires

June 20, 2022 23:15 ET (03:15 GMT)

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