Morning Wrap (27.06.2024)

Asia-Pacific indexes are experiencing a mixed session. Chinese indexes are down between 1.30-1.50%. The Japanese Nikkei 225 index is down 0.30%, while the Australian S&P/ASX200 is up 0.14%. Contracts for the SG20cash index in Singapore are up 1.05%.

Futures contracts for European indexes indicate a lower opening for the session on the Old Continent. The UK100 is down 0.10%, and the DAX is trading 0.15% lower.

In the forex market, volatility is relatively low in the first part of the day. Among the strongest currencies, we can mention the AUD and the JPY. However, despite slight declines today, the USDJPY pair remains above the historically record levels of 160 JPY per USD.

Japan's retail sales report for May came in higher than analysts' expectations today. Data showed an increase of 3% compared to the same month last year. Month-to-month, retail sales rose by 1.7%.

Commercial sales increased by 5.6% year-over-year, also increasing by 2% on a monthly basis. Meanwhile, the seasonally adjusted wholesale sales value increased by 6.7% compared to May 2023. This value increased by 2.3% compared to the previous month.

Japanese authorities will take necessary actions concerning currencies, said Finance Minister Shunichi Suzuki on Thursday, signaling readiness to intervene in the foreign exchange market following the yen's drop to a new 38-year low against the dollar.

Suzuki also emphasized that it is desirable for the exchange rate to move in a stable manner. However, the diplomat declined to comment on the currency level, saying such remarks could impact the market.

Japan's Cabinet Secretary Hayashi refrained from commenting on the dynamic rise in the USDJPY rate and potential currency intervention. Japan will take appropriate steps in the case of excessive movements in the forex market. It is important for currencies to move stably, reflecting fundamentals.

This comments from policymakers in Japan have not changed for a long time. The lack of a clear will to support the JPY is still exerting increasing selling pressure.

The Fed reported that all 31 of the largest U.S. banks successfully passed the annual so-called stress tests conducted on Wednesday, giving regulatory authorities assurance that they could withstand a theoretical scenario in which unemployment would rise to 10% during a severe recession.

In the base scenario, banks including JPMorgan Chase, Goldman Sachs, and Bank of America would lose nearly $685 billion and suffer the largest capital losses in six years, but they would still meet the minimum regulatory standards. The scenario assumed a 40% drop in commercial real estate prices, a significant increase in office vacancies, and a 36% drop in home prices.

The sentiment in the cryptocurrency market is not improving. Despite a slight rebound from local lows at $58,500, Bitcoin is unable to consistently stay above $62,000. Today, Bitcoin is up 0.10% to $60,800.