HONG KONG: On Tuesday afternoon, Asian markets largely erased morning gains as investors maintained their caution ahead of this week’s meeting of the European Central Bank while also keeping an eye out for any consequences of Russia’s gas curtailment.
Following Monday’s Labor Day holiday break, U.S. equities are expected to open higher on Tuesday, with E-mini futures for the S&P 500 index up 0.31%.
However, FTSE futures were down 0.2%, signalling a shaky start in London. As a result of Russia’s announcement that its main gas supply pipeline to Europe will remain closed, European stock indices declined on Monday, the euro dipped below 99 cents for the first time in twenty years, and gas prices in Europe increased.
At 0532 GMT, the MSCI index of Asia-Pacific equities excluding Japan (.MIAPJ0000PUS) was up 0.02%. The Nikkei 225 (.N225) in Japan increased by 0.03%.
China’s benchmark CSI300 Index (.CSI300) increased 0.58% as policymakers promised on Monday to step up efforts to revive the COVID-affected economy. However, the benchmark Hang Seng Index (.HSI) for Hong Kong fell 0.07%.
In addition, the yuan recovered from a more than two-year low versus the dollar after the central bank announced it would reduce the ratio of foreign exchange reserves to strengthen the currency.
According to John Milroy, an investment consultant at Ord Minnett, “Bulk commodities will depend on the impact of Chinese stimulus, and the success of this will be reflected in the main miners.”
Following the Reserve Bank of Australia’s (RBA) predicted 50 basis point hike in the cash rate, Australia’s S&P/ASX 200 (.AXJO) index declined by 0.36%.
On Thursday, the European Central Bank will meet to talk about shifting interest rates. The American Federal Reserve will convene on September 21.
The Commonwealth Bank of Australia analysts predicted that the ECB would raise rates again this Thursday in response to the rising price of goods.
When they gather in an emergency session on Friday, European energy ministers want to talk about ways to reduce the cost of electricity.
The next 75 bp boost in September is expected to be followed by a slowing, according to Sean Darby, global head of equities strategy for Jefferies in Hong Kong.
Tuesday’s drop in oil prices reversed a 3% rise from the previous session as a decision among OPEC+ members to reduce output by 100,000 barrels per day in October was viewed as mostly a symbolic action to stop the market’s current decline.
Brent crude prices increased morning losses by dropping 0.7% to $95.07 per barrel. However, U.S. crude futures were still up 2.12%, trading at $88.71 per barrel.
At $1,718.2 per ounce, spot gold increased by 0.49%. Following a session where the dollar index reached a 20-year high, it decreased by 0.06%.