Cautious Asian session as risk appetite returns

Monday, July 21, 2014

Asian equities adopted a cautious tone during overnight trading as the ramifications of risk events last week ensured tensions remained high. With Japanese markets closed for Marine Day, wider regional benchmarks were struggling with direction, with Australian stocks posting modest gains while Chinese stocks posted mixed results overnight. The Japanese yen strengthened slightly, trading towards 101.25 against the dollar overnight but levels remained within the previous week’s range signalling at the preference from many investors to adopt a wait-and-see attitude. The yen has traded firmly against the dollar since the beginning of June where it traded towards 102.80.

The weekend saw western leaders hint at further sanctions against Russia as mounting evidence pointed the finger at pro-Russia rebels for the shooting down of a Malaysia Airlines passenger jet. The increasing geopolitical tensions saw front month Brent futures rally towards $108.60/bbl on Thursday, a 2.5% leap from Wednesday’s close, as investors assessed the impact to crude supplies. However, prices reversed lower on Friday and have found firm support above $107.20/bbl in early trade this morning as tensions ease and market conditions improve.

With only the Chicago Fed index to look forward to, investors will remain engaged to the unfolding situation between Ukraine, Russia and the West as well as the ongoing Israeli ground assault of Gaza. With the Asian session setting the tone for a cautious return to risk assets, we could see European equities firm throughout the day in the run up to the US session where investors will have further corporate earnings to look forward to.

JPY firms up against the dollar

JPY Curncy Japanese Yen Spot 2014 07 21 07 32 17 

Events for today

JP Market Holiday  




Producer Prices




Chicago Fed

Topics: Equities, Brent, JPY
More from: Kash Kamal