Overnight the Japanese Yen has risen against the Dollar, strengthening 0.5% to ¥154.10, this comes as Japanese QoQ GDP came in at -0.5%, on the back of a reduction in exports and sluggish household spending, private consumption has now declined for four consecutive quarters. The continuing weakness in domestic demand increases the pressure on the Central Bank to raise interest rates quicker. The Topix slipped 0.4%, while equities in other Asian markets rose. The Hang Seng Mainland Properties index jumping 4.4%, buoyed by reports that China’s government was considering buying properties to convert them into public housing.
In US markets, equities closed at record highs yesterday, rallying after inflation data boosted optimism for rate cuts this year. Yesterday's inflation report may offer US policymakers hope that consumer prices are now resuming their downward trend, thus paving the way for rate cuts. Separate retail data indicated some softening of the resilient consumer demand that’s been bolstering the economy. The S&P 500 rose 1.2% to close above 5,300 points for the first time. Technology, real estate and healthcare were the performing sectors, while consumer cyclicals were the only group to finish in the red. The dollar index fell to a one-month low, while treasuries gained, pushing the policy-sensitive two-year yield down 9 bps, the market is now pricing in two rate cuts in 2024.
Elsewhere, Oil edged higher yesterday on a greater-than-expected demand for commercial crude stockpiles. Gold prices also climbed early Thursday, placing the precious metal on track for its third daily advance. Silver rallied 3% overnight setting it up to test a resistance at 29.797, the April 12 high. Bullish demand-supply fundaments remain intact as industrial consumption forecasts point to another deficit year in 2024.
In terms of data today, the BoE financial stability report is due this morning, and in the US we have building permits and initial jobless claims followed by industrial production later in the day.
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