Monday Morning Briefing: Geopolitical Worries Push Yen, Gold Higher
Your Monday morning briefing: SGX Nifty trades flat.
North Korea's failed missile launch and Turkey’s vote set the tone for global markets.
Pyongyang’s ballistic missile launch failed on Sunday, but tensions remained elevated as Bloomberg reported that U.S. President Donald Trump is willing to consider military action, including a sudden strike against North Korea. The yen strengthened against all its major peers, to rise to its highest level since mid-November, while Japan’s Topix fell 0.2 percent.
The lira climbed 2 percent, the most since January 30, after Turkey voted to hand the President Recep Tayyip Erdogan sweeping authority.
Gold rose, adding to last week’s 2.5 percent advance, while oil declined below the $53 mark. U.S. equities declined on Thursday, weighed down by material and energy sectors. U.S. markets are set to reopen today after Friday’s holiday, while markets in Australia, New Zealand and Hong Kong are closed and most European markets are also shut.
SGX Nifty futures traded largely unchanged around 9,155, indicating a flat start for the Indian markets.
Chinese Economy Shows Strength
China’s gross domestic product increased 6.9 percent in the January to March quarter from a year earlier, compared with the 6.8 percent median estimate in a Bloomberg survey of economists.
Data released on Monday also showed that investment picked up, retail sales rebounded and factory output accelerated in March.
Truncated Week
U.S. benchmarks fell from its record highs last week amid growing geopolitical tensions. Uncertainty about Trump's economic and growth agenda also weighed on investors as the S&P 500 Index fell 1.1 percent over the four-day week. The Dow Jones Industrial Average fell 1 percent, and the gauge of small-capital companies dropped 1.4 percent.
Oil Dips
West Texas Intermediate crude fell below the $53 mark, after last week’s 1.8 percent increase, as more OPEC members are seen ready to extend output cuts, even as U.S. crude stockpiles drop from a record.
Hedge funds boosted bets on higher crude prices the second week, according to data from the U.S. Commodity Futures Trading Commission.
Flat Start?
The SGX Nifty, an early indicator of how the Indian equity market may perform, fell 0.02 percent to 9,154 as of 7:10 a.m. Banks will remain in focus after the Finance Ministry indicated that it expects at least six public sector lenders to raise funds from the market.