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Asia Emerging-Market Stocks Gain While Topix Slips

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  • Asia Emerging-Market Stocks Gain While Topix Slips

An equities rally spurred by the Federal Reserve’s outlook found some life in Asian emerging markets, even amid a slump in Japanese and U.S. shares. The dollar was steady after a two-day decline.

Stocks in Indonesia reached a record and markets from Malaysia to South Korea climbed, helped by a weaker U.S. currency. Shares in Tokyo slumped, weighing down the MSCI Asia Pacific Index after its biggest gain since November. The S&P 500 Index’s post-Fed rally ran out of steam after the gauge climbed to within 0.5 percent of an all-time high. Treasuries maintained Thursday’s declines, while the dollar was poised for its biggest weekly loss in more than a month.

Global stocks are on course for the best week since January after the Fed raised its benchmark lending rate a quarter point without accelerating the timetable for future hikes. Investors largely anticipated the tightening and Treasury yields had climbed with the dollar on speculation the central bank might signal a faster pace of tightening.

“A less hawkish monetary policy in the U.S. is more likely to push assets outside of the U.S. into higher-risk, higher-return markets,” James Woods, a Sydney-based investment analyst at Rivkin Securities, said in a phone interview. “A weaker dollar is supportive of those emerging markets generally. I’m not sure whether its going to be long-lived though. People are going to get back to focusing on the next Fed hike, and also Trump’s policies which would be dollar supportive.”

China’s central bank also raised borrowing costs this week and the Bank of Japan left its monetary policy setting unchanged. The pound gained Thursday as some Bank of England policy makers said they may not be far behind Kristin Forbes who’s leaning toward raising interest rates.

Volatility is retreating across the globe after the central bank policy decisions. At the same time, the defeat in this week’s Dutch elections of anti-immigration candidate Geert Wilders is being seen as a blow to populist political leaders, easing concerns ahead of French elections. A gauge of volatility on the Euro Stoxx 50 Index plunged 26 percent on Thursday, the most on record.

“Volatility is scarily low and there’s just a lot of complacency out there,” James Audiss, a senior wealth manager at Shaw and Partners in Sydney, said in a phone interview. “After we get through the big macro events with governments and elections, we have to start to look to corporate earnings. That’s where it becomes not so much a systemic stock market move as stock selection.”

Here are the main moves in markets:

Stocks

  • The MSCI Asia Pacific Index retreated 0.2 percent as of 1:12 p.m. in Tokyo, after closing Thursday at the highest level since June 2015. Japan’s Topix fell 0.5 percent, heading for a weekly decline.
  • The MSCI Emerging Markets Index rose 0.2 percent. The Jakarta Composite Index gained 0.4 percent to a record, after a 1.6 percent surge on Thursday. Malaysia’s benchmark jumped 0.6 percent. Both markets are up more than 1.8 percent for the week.
  • New Zealand’s S&P/NZX 50 Index increased 0.1 percent. Australia’s S&P/ASX 200 Index rose 0.4 percent. South Korea’s Kospi gained 0.4 percent.
  • Hong Kong’s Hang Seng and the Hang Seng China Enterprises Index added at least 0.2 percent, after soaring the most since May on Thursday.
  • The S&P 500 slipped 0.2 percent Thursday, while the Stoxx Europe 600 Index rose 0.7 percent.

Currencies

  • The Bloomberg Dollar Spot Index was little changed after dropping 0.2 percent on Thursday on top of a 1.3 percent post-FOMC drop. The gauge is down 1.2 percent for the week, the most since the period ended Feb. 3.
  • The yen edged lower to 113.46 per dollar, down 0.1 percent to pare is biggest weekly gain in more than a month.
  • The pound slipped less than 0.1 percent to $1.2351. The currency is up 1.5 percent for the week, its biggest gain since January.

Bonds

  • The yield on 10-year Treasuries fell less than one basis point to 2.54 percent, after rising five basis points on Thursday. The rate dipped below 2.50 percent following the Fed decision. It traded above 2.60 percent earlier in the week.
  • Australian 10-year yields rose for the first time in five days, climbing five basis points to 2.86 percent. The rate tumbled 10 basis points on Thursday.
  • The yield on New Zealand’s benchmark advanced three basis points to 3.28 percent, after also dropping 10 basis points in the previous session.

Commodities

  • Oil advanced 0.2 percent to $48.85, heading toward its first weekly gain in three weeks.
  • Gold was steady after a two-day gain, trading at $1,226.94 an ounce and poised for a 1.9 percent increase for the week.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Markets

Global Markets Near Record Peaks and Will Get Stronger: deVere CEO

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Stocks

As the FTSE 100 hits 7,000 points for the first time since the Covid pandemic, global stock markets are poised to “get even stronger”, says the CEO of one of the world’s largest independent financial advisory and fintech organisations.

The observation from Nigel Green, the chief executive and founder of deVere Group, comes as London’s index jumped over the important threshold in early trading in London, gaining over 0.5% to 7024 points.

Mr Green notes: “London’s blue-chip index is up 40% since the worst lows of the pandemic.

“This landmark moment represents the wider optimistic sentiment gripping global markets which are near record peaks.

“We can expect global stock markets to get even stronger as investors look to seize the opportunities from economies reopening.

“They are looking towards economies rebounding in a post-pandemic era due to the monetary and fiscal stimulus, pent-up cash and demand, and strong corporate earnings.

“The current ultra-low interest rate environment and the under-performance of bonds will also act as a catalyst for stock markets.”

However, the CEO’s bullish comments also come with a warning.

“I would urge investors to proceed with caution as there are some headwinds on the horizon, including relations between the U.S. and China, the world’s two largest economies, which could be coming to a tipping point in coming weeks.

“As such, in order to capitalise on the opportunities and mitigate risks, investors must ensure proper portfolio diversification.”

Mr Green concludes: “A variety of factors are going to drive global stock markets. Investors will not want to miss out and should work with a good fund manager to judiciously top-up their portfolios.”

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Markets

Refinitiv Expands Economic Data Coverage Across Africa

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Building on its commitment to drive positive change through its data and insights, Refinitiv today announced the expansion of its economic data coverage of Africa. The new data set allows investment managers, central bankers, economists, and research teams to use Refinitiv Datasteam analytical data for detailed exploration of economic relationships and investment opportunities among data series covering the African continent.

Securing reliable, detailed, timely, locally sourced content has not been easy for economists who have in the past had to use international sources which often can take many months to update and opportunities to monitor the market can be missed. Because Africa is a diverse continent, economists and strategists need more timely access to country-specific data via national sources to create tailored business, policy, trading and investment strategies to meet specific goals.

Africa continues to develop critical infrastructure, telecommunications, digital technology and access to financial services for its 1.3bn people. The World Bank estimates that over 50% of African inhabitants will be under 25 by 2050. This presents substantial opportunities for investors who can spot important trends and make informed decisions based on robust and timely economic data.

Stuart Brown, Group Head of Enterprise Data Solutions, Refinitiv, said: “Africa’s growing, dynamic and fast evolving economies makes it a focal point for financial markets today and in the coming decades.  As part of LSEG’s commitment to empowering the global markets with accurate and timely data, we are excited about making these unique datasets available via the Refinitiv Data Platform. Our economic data coverage of Africa will provide our customers with deeper and broader inputs for macroeconomic analyses and enable more effective investment strategies and economic research.”

Refinitiv Africa economic data coverage:

  • Africa economics content comprises around 500,000 nationally sourced time series data covering 54 African nations
  • Content is sourced from national statistical offices, central banks and other key national institutions
  • The full breadth of economics categories in Datastream including national accounts, money and finance, prices, surveys, labor market, consumer, industry, government and external sectors
  • International sources including OECD, World Bank, IMF, African Development Bank, Oxford Economics & more provide comparable data & forecasts across the continent

Refinitiv® Datastream® has global macroeconomics coverage to analyze virtually any macro environment, and better understand economic cycles to uncover trends and forecast market conditions. With over 14.2 million economic times series map trends, customers can validate ideas and identify opportunities using Refinitiv Datastream. Access its powerful charting tools, 9,000 pre-built chart templates and chart studies for commonly used valuation, performance, and technical and fundamental analysis.

 Refinitiv continually grows available data – the China expansion in 2019 covered a unique combination of economic and financial indicators. Refinitiv plans to expand Southeast Asia covering Thailand, Vietnam, Philippines and Malaysia with delivery expected in 2021. This ensures that Refinitiv will have much needed emerging market economic content.

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Crude Oil

Oil Rises on Drawdown in U.S. Oil Stocks, OPEC Demand Outlook

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Oil prices rose in early trade on Wednesday, adding to overnight gains, after industry data showed U.S. oil inventories declined more than expected and OPEC raised its outlook for oil demand.

Brent crude futures rose 28 cents, or 0.4%, to $63.95 a barrel at 0057 GMT, after climbing 39 cents on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures similarly climbed 28 cents, or 0.5%, to $60.46 a barrel, adding to Tuesday’s rise of 48 cents.

Oil price gains over the past week have been underpinned by signs of a strong economic recovery in China and the United States, but have been capped by concerns over stalled vaccine rollouts worldwide and soaring COVID-19 infections in India and Brazil.

Nevertheless, the Organization of the Petroleum Exporting Countries (OPEC) tweaked up its forecast on Tuesday for world oil demand growth this year, now expecting demand to rise by 5.95 million barrels per day (bpd) in 2021, up by 70,000 bpd from its forecast last month. It is banking on the pandemic to subside and travel curbs to be eased.

“It was a welcome prognosis by the market, which had been fretting about the impact the ongoing pandemic was having on demand,” ANZ Research analysts said in a note.

Further supporting the market on Wednesday, sources said data from the American Petroleum Institute showed crude stocks fell by 3.6 million barrels in the week ended April 9, compared with estimates for a decline of about 2.9 million barrels from analysts polled by Reuters.

Traders are waiting to see if official inventory data from the U.S. Energy Information Administration (EIA) on Wednesday matches that view.

Market gains are being capped on concerns about increased oil production in the United States and rising supply from Iran at a time when OPEC and its allies, together called OPEC+, are set to bring on more supply from May.

“They may have to contend with rising U.S. supply,” ANZ analysts said.

EIA said this week oil output from seven major shale formations is expected to rise by 13,000 bpd in May to 7.61 million bpd.

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