The dollar is on the offensive as risk aversion reemerged
During regular trading hours on Tuesday, Wall Street indices rallied after a long weekend (US stock markets were closed Monday for Juneteenth), with three major benchmarks adding more than 2%. The Dow Jones Industrial Average jumped 2.15% in its best day for the month. The S&P 500 climbed 2.45%. The Nasdaq Composite jumped 2.51%. However, stocks failed to retain upbeat tone, losing ground in early pre-market trading on Wednesday as recession and inflation fears reemerged.
Asian stock markets fell across the board on Wednesday as the recent rally fizzled on revived inflation fears. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.39%, while Tokyo’s Nikkei 225 gave up early gains to shed 0.37% after Bank of Japan’s April minutes confirmed the bank will ease further if necessary, without hesitation. Elsewhere, the S&P ratings agency downgraded Shanghai-based developer Greenland to selective default. China’s Shanghai Composite fell 1.20% on Wednesday.
In Europe, equities opened lower as the overall investor sentiment kept deteriorating on Wednesday. The pan-European Stoxx 600 dropped 1.6% in early deals. On the data front in Europe, the UK CPI hit a new 40-year high of 9.1% year-on-year in May, adding to inflation concerns. In individual stocks, Umicore fell more than 15% after announcing its strategy for 2030. The company’s new strategic plan designed to accelerate value creative growth.
Meanwhile, the dollar is back on the offensive as risk aversion reemerged. The USD index regains ground after the recent slide, retargeting the 105.00 figure. USDJPY refreshed 24-year highs around 136.70 before retreating marginally in recent trading. Still, the pair could see another push north after a pause, with the 137.50 zone coming into the market focus. The yen continues to suffer from the Bank of Japan’s tight policy that comes in contrast with the Fed’s aggressive tightening plan.