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    Global equities stabilise ahead of FOMC meeting

    Market Brief

    G10 Advancers and Decliners vs USD
    NZD 0.37
    GBP 0.21
    AUD 0.14
    NOK 0.11
    CAD 0.04
    EUR 0.01
    DKK 0.00
    JPY -0.04
    SEK -0.09
    CHF -0.11
    Global Indexes Current Level % Change
    Nikkei 225 Index 15919.58 0.38
    Hang Seng Index 20446.15 0.29
    Shanghai Index 2885.006 1.51
    FTSE futures 5945 0.39
    DAX futures 9586 0.77
    SMI Futures 7690 0.48
    S&P future 2074.4 -0.21
    Global Indexes Current Level % Change
    Gold 1284.86 -0.07
    Silver 17.42 0.14
    VIX 20.5 -2.24
    Crude wti 47.81 -1.4
    USD Index 94.83 -0.1

    FX markets stabilised during the Asian session as traders await the outcome of the June FOMC meeting. EUR/USD was little changed in Tokyo and consolidated the gains made on the release of better-than-expected May retail sales. The headline printed at 0.5%m/m versus 0.3% median forecast, while the previous month’s figures was confirmed at 1.3%. However, one notices that the upside surprise resulted almost entirely from an increase in gasoline ( 2.1%) and solid auto sales ( 0.5%). The ex Auto and Gas gauge matched expectations and printed at 0.3%m/m. In spite of the stronger result, we do not think it will revive expectations for a summer rate hike - even in July - as most economic indicators continue to lose momentum. The single currency will find a strong support at $1.1137 (low from June 3rd) then $1.1098 (low from May 30th).

    After a rough Tuesday, the pound sterling stabilised at around 1.4140 against the US dollar. Brexit fears will continue to weigh on the GBP as we get close to June 23. The 1.41 area will likely hold for now as long as the Brexit and remain camps remain neck-and-neck in the polls. However, in the event that the polls provide strong indication that the UK is heading for the Brexit door, the pound sterling will resume its free fall and move towards the 1.30.

    In China, the index provider MSCI once again postponed its inclusion of China mainland shares in its main emerging market index amid concerns about the accessibility to the A-share market. This would have provided much needed relief for the Chinese stock market, which is one of the worst performers of 2016 so far. At least, this rejection provides further incentive to improve and implement policy. The yuan moved to a five-year low amid the news as the PBoC set the fix to 6.6001, the lowest level since February 2011.

    In the equity market, most Asian regional indices stabilised, putting an end to a 4-day losing streak. European stocks followed the lead as futures were also blinking green across the board. In Japan, the Nikkei and Topix index were up 0.38% and 0.41% respectively. In mainland China, the CSI 300 rose 1.20%. Offshore, Hong Kong’s Hang Seng surged 0.29%, while in Taiwan the Taiex slid 0.35%.

    Today traders will be watching the unemployment rate from Turkey; jobless claims and ILO unemployment rate from the UK; MBA mortgage application, PPI, Empire manufacturing, industrial production, capacity utilisation, crude oil inventories and FOMC rate decision from the US; manufacturing sales from Canada; retail sales from Brazil.


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