While Wall Street stocks climbed to fresh all-time highs overnight, Asian equities were mixed on Tuesday, with Chinese and Hong Kong stocks leading the losses again. As a reminder, over the weekend, after Beijing announced additional enforcement measures on technology, real estate, and for-profit education ventures. In Europe, stocks opened lower, continuing to digest China’s regulatory crackdown. Now, investors are shifting focus to the upcoming Federal reserve meeting that concludes on Wednesday.
Elsewhere, ECB's Holzmann said the ECB to discuss policy in September alongside forecasts, adding that he has reservations regarding the new guidance revealed by the central bank. On the data front, Eurozone’s June M3 money supply came in at +8.3% versus +8.2% y/y expected.
Against this backdrop, the UK FTSE 100 sheds 0.75% to 6,972, Italy’s FTSE MIB loses 0.83% to 25,086, France’s CAC 40 gives up 0.60% to 6,539, while the German DAX 30 sheds 0.82% to 15,490. U.S. stock index futures were lower in early pre-market trade, with investor focus gradually shifting towards the Federal Reserve two-day policy meeting, concluding on Wednesday.
Also, market players await fresh economic data out the United States. Later today, durable goods orders and the Conference Board’s consumer confidence gauge will take centre stage along with the house price index and the Richmond Fed manufacturing index. Besides, investors await second-quarter results from the big tech giants including Apple and Microsoft due later today.
In currencies, the dollar reversed Monday’s losses to turn positive versus most counterparts today as risk sentiment turned sour again. EURUSD failed to cling to the 1.1800 figure as the dollar shrugged off yesterday’s weakness to proceed to a recovery. Now, the pair struggles around 1.1780 and could threaten last week’s lows around 1.1750 if the selling pressure intensifies. In the context of the upcoming Fed’s meeting, the path of least resistance for the common currency remains to the downside. Furthermore, the pair could threaten the 1.1700 figure if the greenback rallies in the coming days. If the upcoming economic data surprises on the upside, the greenback would derive extra support in the short term.
Nathan Lambert, Head of Global FX Analytical Department