Morning Report

Monday, 18 May 2020

  • Asia shares make cautious gains, oil and gold jump
  • Dollar holds firm on China tensions; negative rates talk sinks pound
  • Oil prices climb more than $1 ahead of WTI June contract expiry

Asian shares crept ahead on Monday and oil prices hit a five-week high as more countries re-opened their economies, stirring hopes the world was nearer to emerging from recession.

Summer weather is enticing much of the world to emerge from coronavirus lockdowns as centres of the outbreak from New York to Italy and Spain gradually lift restrictions that have kept millions cooped up for months. The economies of Europe and the U.S. likely bottomed out in April and are slowly starting to come back to life.

MSCI’s broadest index of Asia-Pacific shares outside Japan  edged up 0.1% in early trade. Japan’s Nikkei rose 0.2% and South Korean stocks  0.1%. E-Mini futures for the S&P 500 added 0.7%, though results from a raft of U.S. retailers this week are likely to make grim reading.

The dollar has also been largely range-bound, with its safe-haven appeal keeping it well supported overall. Against a basket of currencies, it was last at 100.38, having drifted 0.7% higher last week.

The euro was steady at $1.0820, while the dollar edged up 0.2% on the Japanese yen to 107.25. The pound touched a seven-week low at $1.2073 after the chief economist of the Bank of England said the bank was looking more urgently at options such as negative interest rates and buying riskier assets to prop up the economy.

Indian Rupee which closed on Friday at 75.56 is likely to open gap up around 75.70 as lockdown is extended in most part of country till 31 May dashing hopes of an early revival of Indian economy.

In commodity markets, the flood of liquidity from central banks combined with record-low interest rates to help lift gold to a seven-year peak. The metal was last up 1% to $1,758 an ounce.

Oil prices reached their highest since March on a pick-up in demand as countries around the world eased travel restrictions. Brent crude futures firmed 96 cents to $33.46 a barrel, while U.S. crude rose 98 cents to $30.41.

Source : Reuters

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