Extraordinary rally rips through all markets
By Jamie McGeever
Aug 1 (Reuters) -A look at the day ahead in Asian markets.
After an unexpectedly bold move from the Bank of Japan, the Federal Reserve indicating that U.S. rates are about to come down, and an explosive rise in U.S. megacap stocks on Wednesday, investors may be in need of some respite on Thursday.
Good luck with that.
Aside from the continuing ripples across all asset classes from the BOJ, Fed and tech boom, a wave of manufacturing PMIs from China and across Asia lands and investors are bracing for more Big Tech earnings and a possible Bank of England rate cut.
Thursday is also the first trading day of the month, and investors may want to put capital to work. Wednesday's surge in risk appetite, especially in chip stocks, may fuel those spirits.
Investors usually baulk at volatility but appear to be embracing it right now. Look at Nvidia shares - down 7% on Tuesday then soaring 13% on Wednesday to bring its market cap back above $3 trillion.
That's a one-day increase in market value of over $350 billion.
Wednesday's action across all markets may have been tied to position adjustments on the last trading day of the month, but was nevertheless extraordinary.
The Nasdaq had its best day since February last year, geopolitical tensions helped fuel a 5% rise in WTI crude oil forits best day this year, and palladium was the pick of the bunch in a buoyant precious metals complex, rising 4%.
U.S. bond yields fell to their lowest since February or March, depending on what part of the curve, while the dollar's slump against a rampant yen dragged down its broader value against a range of G10 and emerging currencies.
The South Korean won posted its biggest rise this year, aided by strong Samsung earnings and a chip-fueled stock market rally, while the Thai baht hit a four-month high.
That momentum will likely extend into Asia on Thursday, although the BOJ's hawkish stance and Fed's more balanced posture - certainly relative to some recent soundings from key former Fed officials - may put the brakes on as the day progresses.
The yen and Nikkei could be most primed for reversal, having rallied strongly on Wednesday. The yen jumped 2% to break through 150.00 per dollar for the first time since March.
On the data front, the most market-sensitive releases will probably be manufacturing sector purchasing managers index reports from China and across Asia. China's 'official' PMIs on Wednesday showed that manufacturing sector activity continued to shrink in July while service sector growth slowed.
Here are key developments that could provide more direction to markets on Thursday:
- China, Asia manufacturing PMIs (July)
- Indonesia inflation (July)
- South Korea trade (July)
China's July factory activity contracts again https://reut.rs/3ynjBV3
Yen-maggedon https://reut.rs/3YrGwZT
BOJ raises rate target to 0.25%, highest since 2008 https://reut.rs/3LLWmXR
Reporting by Jamie McGeever;
Editing by Bill Berkrot
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
