Source: Golden Ten Data
Author: Xiao Yanyan
In the afternoon of Monday (May 23), the rise of U.S. stock index futures boosted investors’ risk appetite, and various assets generally ushered in a rebound . It came after the S&P 500 fell for a seventh straight week, its longest stretch of weakness since 2001.
As of press time, the three major U.S. stock index futures all rose more than 1%, and the Nasdaq futures rose about 1.6%.
The US dollar index fell to 102.57 in the short-term, and the non-US currencies collectively rose.
The risk-sensitive Australian and New Zealand dollars climbed to their highest levels in weeks by press time . The Australian dollar rose nearly 20 points against the US dollar in the short-term, with an intraday gain of 1% to 0.7112; the New Zealand dollar rose more than 1% against the US dollar to its highest level since May 5. Leveraged funds bought the two currencies, triggering a short squeeze, traders said. The Australian dollar also clearly gained momentum after the Australian election over the weekend.
Meanwhile, the euro extended gains on the day to 0.5% at 1.0604. Both the offshore renminbi against the dollar and onshore renminbi rose above 6.66 against the dollar .
Spot gold and silver also rose in the short term. Spot silver expanded to 1% within the day, and fell after breaking through the 22 mark; spot gold once rose above 1858, approaching the 1860 mark and then falling back.
Sean Callow, senior currency strategist at Westpac, said improving stock market sentiment was boosting risk-sensitive currencies such as the Australian and New Zealand dollars, while safe-haven currencies such as the U.S. dollar were struggling. The New Zealand dollar has also “performed well” over the past few sessions, which could be “a sign of pricing ahead of the RBNZ decision this week,” he said.
The Reserve Bank of New Zealand is due to announce its monetary policy decision on Wednesday, with the median forecast in a survey of economists showing it will raise interest rates by 50 basis points to 2%. According to the New Zealand Institute for Economic Research (NZIER), most members expect the Reserve Bank of New Zealand to raise interest rates by 50 basis points this week .
On the stock market, Asia-Pacific stocks were mixed. The Shanghai Composite Index turned red again in the afternoon, and the ChiNext Index narrowed its decline to 0.34%. In terms of sectors, monkeypox concept stocks led the gains in the two markets, steel, nonferrous metals, coal and other cyclical sectors rose sharply, dairy stocks rose in a straight line, lithium mining stocks and agricultural stocks were active, and automobile and parts sectors rose. The Hang Seng Index rose short-term in the afternoon, and the decline narrowed to about 1%, after falling nearly 2% before; the Hang Seng Technology Index fell about 2%.
Investors are grappling with the prospect of a slowing economy and further monetary tightening by central banks. Louise Dudley, global equity portfolio manager at Federated Hermes Ltd., said in a note:
“We expect significant market volatility as macroeconomic concerns persist due to aggressive monetary tightening, Russia’s conflict with Ukraine and some coronavirus lockdowns in Asian countries.”
The minutes of the Fed’s interest rate meeting, released this week, will give markets a glimpse into the Fed’s tightening path. St. Louis Fed President Bullard previously said that the Fed should take a series of aggressive interest rate hikes ahead of schedule, pushing interest rates to 3.5% by the end of the year, if successful, it will push down inflation and may lead to interest rate cuts starting in 2023 or 2024.
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