Asian stocks in a gloomy mood at the end of the quarter, dollar on the higher
Japan’s Nikkei (.N225) fell 0.8%, though its decline has been a relatively modest 4% in the quarter, driven by a weaker yen and the Bank of Japan’s firm commitment to super-easing policies.
The need for a stimulus was underscored by data showing Japanese industrial output fell by 7.2% in May, when analysts were looking for a decline of just 0.3%.
Chinese blue chips (.CSI300) added 0.6%, helped by a survey that showed a significant increase in services activity.
Analysts at JP Morgan are seeing a major rally in China in the coming months and feel that with so much bad news in the world markets, there is an argument for a bounce in the situation.
“It is not that we think the world and economies are in great shape, but rather that an average investor anticipates an economic disaster, and that if this risky asset class does not hold, they will lose most of their losses from the first half. recovery,” he says. Wrote in a note.
dollars in demand
For now, the risk of a recession was enough to push the US 10-year yield back to 3.085% from its recent peak at 3.498%, though it is still up 77 basis points for the quarter.
The yield curve has been consistently flat, and has turned negative in the three- to seven-year range, while futures are almost fully priced at the Federal Reserve for another hike of 75 basis points in July.
The Fed’s enthusiasm, combined with an investor’s desire for liquidity in difficult times, has gifted the US dollar its best quarter since late 2016. The dollar index was trading at 105.100 and was just a whisker from the recent two-decade peak of 105.79.
The euro was struggling at $1.0442, down 5.6% so far this quarter, although it remained just above the May trough of $1.0348.
The Japanese yen is in even worse shape, with the dollar rising more than 12% to 136.70 in the quarter and hitting its highest level since 1998.
Rising interest rates and a higher dollar do not bode well for non-yielding gold, which was stuck at $1,818 an ounce, down 6% for the quarter.
Oil prices were flat on Thursday amid concerns of an unseasonal slowdown in US gasoline demand, even as global supplies remain tight.
OPEC and OPEC+ ended their two-day meetings on Thursday with hopes they would be able to pump much more oil despite US pressure to raise quotas.
September Brent rose 2 cents to $112.47 a barrel, while US crude was down 5 cents to $109.73.