DAILY MARKET ANALYSIS 20-06-2022

Stocks

US major indices climbed on Monday as risk appetite returned to the markets, but persistent concerns about inflation and a possible recession kept sentiment in check. Dow Jones rose 0.5%, S&P 500 added 0.7% and Nasdaq 100 gained 1%. Those moves came after another week of heavy selling on Wall Street, with the S&P 500 losing 5.8% and sinking deeper into bear market territory.

European stocks edged higher on Monday after a sharp selloff last week on recession worries, while French shares lagged its peers after President Emmanuel Macron lost an absolute majority in the country's parliamentary election. The pan-European STOXX 600 index rose 0.4%, with battered banking, travel and retail stocks leading the gains.

Shares in Asia-Pacific were mixed on Monday, as investors monitored market reaction to the release of China’s latest benchmark lending rates. The Shanghai Composite in mainland China closed mildly lower at 3,315.43 while the Shenzhen Component gained 1.265% to 12,487.13. Hong Kong’s Hang Seng index climbed 0.42%, closing at 21,163.91 while The Nikkei 225 in Japan finished the trading day 0.74% lower at 25,771.22.

Currencies

•  The dollar index eased toward 104.4 in thin holiday trade on Monday, giving back some gains from the previous session, but remains close to a 20-year high reached last week as expectations that the Federal Reserve will continue to aggressively tighten monetary settings supported the currency.

• EUR/USD has edged higher at the start of the new week but struggled to gather bullish momentum. The pair holds above 1.0500 in the early European session and continues to fluctuate between key technical levels.

•  The GBP/USD pair showed resilience below the 1.2200 round-figure mark and attracted some buying on the first day of a new week. The pair held on to its modest gains through the early European session and was last seen trading just above mid-1.2200s.

•  AUD/USD regained positive traction and reversed a major part of Friday’s downfall. The pair maintained its bid tone through the early part of the European session and was last seen trading near the daily high, just below the 0.7000 mark.

•  The USD/JPY pair attracted some sellers near the 135.45 region on Monday and retreated over 90 pips from the vicinity of a 24-year peak touched last week. Spot prices dropped to a daily low, around mid-134.00s during the early European session and eroded a part of Friday's dovish Bank of Japan-inspired strong gains.

Bonds

The 10-year US Treasury note yield hovered below the 3.3% level as investors rushed into safe-haven assets on concerns that an aggressive tightening from central banks could tip economies into a recession.

Commodities

Gold Price is trading modestly flat around $1,840, reversing the rebound seen in the Asian session. The recovery in risk sentiment is boding ill for the safe-haven US dollar, in turn, capping the downside in the bright metal. Thinner liquidity conditions on account of the Juneteenth holiday in the US also leave the dollar bulls at bay, helping the metal find a floor.

Oil prices were stable on Monday, struggling to reverse last week's losses as the market balanced tightening supplies with concerns about slowing global economic growth. Brent crude was down 38 cents at $112.74 a barrel while U.S. West Texas Intermediate crude was at $109.38 a barrel, down 18 cents.

Up Ahead –Tuesday 21-06-2022

•   AUD  Monetary Policy Meeting Minutes

•   CAD Core Retail Sales m/m

•   USD Existing Home Sales

*The information presented above is intended for informative and educational purposes, should not be considered as investment advice, or an offer or solicitation for a transaction in any financial instrument and thus should not be treated as such. Past performance is not a reliable indicator of future results.