Market Update – June 28 – Fear back even in Summer

Wall Street was mixed on Friday, with USA30 outperforming as reflation trades are back on. Supporting the rally was a blowout earnings report from Nike. The company saw record quarterly US sales & a bottom line beat, seeing the USA30 member surge to all-time highs, gaining over 15%.  USA500 closed at record highs, adding 0.34%, up 14 points to 4,281. Yields pushed higher last week as growth optimism dominated, but investors are keeping a wary eye on virus developments amid  emergence of new more infectious strains.

Today: A very slow start to the week for equities, with markets across the Asia-Pacific region hardly moving as investors weighed Covid developments & the outlook for central bank policy.  10-year Treasury yield  unchanged at 1.5%. Equity markets have traded narrowly mixed, as a new rise in Covid-19 infections across Asia & concern over more potent strains weighed on sentiment.  Malaysia’s  nationwide lockdown was extended, while Greater Sydney was put under stricter restrictions in a bid to contain outbreaks.  Hong Kong  morning session was cancelled thanks to a rain storm warning. BoJ was confident of recovery at the June meeting, as shown by the discussion summary. The sense was that accelerating vaccination programs would prop up the economy. At the same time inflation pressures were still judged to be benign given the fragile recovery.

Forex Market: JPN225 is currently down -0.1%. GER30 & UK100 futures are up 0.1% at the moment & US futures are posting similar gains.  AUD & NZD drifted lower, USDJPY dropped to 110.61 while  EUR steadied between 1.1920-1.1970 for a 5th day. Pound strengthened across the board and Cable is off last week’s lows, currently at 1.3909. USOIL topped to $73.69. Gold prices slipped to a 1-week low on Monday, weighed down by a bounce in the Dollar & mixed signals from the FED on monetary policy tightening despite tame inflation data.

Monday’s Calendar – Fed’s Williams, Quarles,  ECB’s Panetta,  Japan Labor data & Retail Trade.

Significant FX Mover @ (06:30 GMT) XAUUSD (+0.34%) Rallied to  upper range level at 1785.77. Faster MAs currently flattened, RSI 54 & slipping, MACD signal line & histogram close to 0 line. Stochs rising & testing OB zone again. H1 ATR 3.4457, Daily ATR 27.3871.

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Andria Pichidi 

Market Analyst

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