Capital Markets Look For Direction

Overview: Risk appetites have not returned from the weekend. Equities are heavy, and bond yields softer. The dollar is drifting lower in Europe. China's unusually candid admission of the shortcomings of its vaccine and record new cases in India saw all the equity markets in the region fall. Only South Korea and Taiwan escaped the carnage that saw the Indian market tumble 3.5%. Recall that the MSCI Asia Pacific peaked on February 16. European shares have been faring better. The Dow Jones Stoxx 600 has a six-week rally in tow but is off almost 0.25% through the European morning today with all the sectors under waters but utilities. US futures are around 0.15%-0.25% lower. Benchmark 10-year yields are 1-2 basis points lower in Europe and the US, leaving the Treasury near 1.65%. The US Treasury will sell $96 bln in coupons today (a new three-year note and re-opening of the 10-year) and $111 bln of bills. The dollar's gains in Asia-Pacific turnover have reversed in Europe. Among the majors, only the Swedish krona and Canadian dollar have been unable to turn higher on the day. The yen and sterling are leading the move. Emerging market currencies are mixed, leaving the JP Morgan Emerging Market Currency Index slightly changed after falling ahead of the weekend. Gold rose to its highest level since late February last week (almost $1759) but pulled back ahead of the weekend and is lower today, straddling the $1740 area. Support is seen near $1730. June WTI is firm but below $60. The contract continues to trade within the range set on April 5 (~$57.70-$61.50). OPEC updates its outlook tomorrow and the IEA on Wednesday. 

Asia Pacific

Gao Fu, the Director of China's Centers for Disease Control, acknowledged that its vaccines are not particularly effective over the weekend. It looks to offer around half the protection of the Pfizer and Moderna vaccines. China has yet to approve foreign vaccines. Beijing has exported millions of vaccines and has thrown shade on the mRNA vaccines. Some countries have been suspicious of the efficacy of China's vaccine. The UAE has experimented with giving three doses instead of two to boost the antibodies. Singapore has stockpiled but not used the Sinovac.

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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