PlusMarkets Analysis • July 21, 2021
Asian shares stumbled on Wednesday, giving up early gains, while the dollar was firm as investors worried that a fast-spreading coronavirus variant could impede a global economic recovery.
But European share markets were set for a slightly higher open following sharp falls early in the week, ahead of a European Central Bank meeting on Thursday that is expected to convey a dovish tone.
Euro Stoxx 50 futures rose 0.16% and German DAX futures were up 0.07%. FTSE futures added 0.08%.
The Delta coronavirus variant has for the moment displaced inflation as investors’ primary source of concern, with South Korea on Wednesday reporting a daily record of new infections.
Last week, data showing a surge in U.S. consumer prices in June had sparked fears that the Federal Reserve could bring a quicker end to emergency stimulus measures.
Gold was down on Wednesday morning in Asia. The dollar strengthened and fears about the recent surge in COVID-19 cases involving the Delta variant also eased, thus increasing investors’ risk appetite.
Gold futures edged down 0.18% to $1,808.05 by 1:10 AM ET (5:10 AM GMT). The dollar, which usually moves inversely to gold, inched up on Wednesday to a near three-and-a-half-month high. Benchmark 10-year U.S. Treasury yields also bounced off five-month lows.
Asian shares were also mostly up on Wednesday, as investors regained risk appetite thanks to upbeat earnings reports and revived economic optimism.
In Asia, the Bank of Japan (BOJ) also released the minutes from its latest policy meeting. Many BOJ policymakers were worried rising global commodity costs will gradually push up the country’s inflation, though some also said that weak consumption will keep any upward pressure modest.
Oil was down Wednesday morning in Asia, with investors digesting a surprise build in U.S. crude oil supplies and continuing to assess the impact of surging COVID-19 cases on fuel demand.
Brent oil futures were down 0.46% to $69.03 by 1:38 AM ET (5:38 AM GMT) and WTI futures fell 0.51% to $66.86.
U.S. crude oil supply data from the American Petroleum Institute released on Tuesday showed a build of 806,000 barrels for the week ended Jul. 16. Forecasts prepared by Investing.com had predicted a draw of 4.167 million barrels, while a 4.079-million-barrel draw was recorded during the previous week.
Should the build be confirmed in crude oil supply data from the U.S. Energy Information Administration, due later in the day, it would be the first since May.
Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. UR Trade Fix Ltd accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Past performance does not constitute a reliable indicator of future results and future forecasts do not constitute a reliable indicator of future performance.
It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organizational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests when providing our services