Asia Morning: U.S. Stocks Rebound as Fed Buys Corporate Bonds


On Monday, U.S. stocks pared early losses to close in positive territory, lifted by the Federal Reserve's announcement that it would start buying individual corporate bonds...

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On Monday, U.S. stocks pared early losses to close in positive territory, lifted by the Federal Reserve's announcement that it would start buying individual corporate bonds. The Dow Jones Industrial Average slid 762 points at the open before working its way up to close at 25763, up 157 points or 0.6% on day. The S&P 500 rose 25 points (+0.8%) to 3066, and the Nasdaq 100 was up 113 points (+1.2%) to 9776.

Nasdaq 100 Index: Daily Chart

Source: GAIN Capital, TradingView

Consumer Durables & Apparel (+2.09%), Insurance (+1.8%) and Food, Beverage & Tobacco (+1.6%) sectors performed the best. ViacomCBS (VIAC +8.69%), Lennar Corp (LEN +7.17%) and ONEOK (OKE +6.89%) were top gainers.

On the technical side, about 39.3% (36.3% in the prior session) of stocks in the S&P 500 Index were trading above their 200-day moving average, and 46.2% (32.5% in the prior session) were trading above their 20-day moving average. 

Regarding U.S. economic data, the Empire Manufacturing Index spiked to -0.2 in June (-29.6 expected) from -48.5 in May.

Due later today are May Retail Sales (+8.0% on month expected) and Industrial Production (+3.0% on month expected).

European stocks were broadly lower, with the Stoxx Europe 600 Index easing 0.3%. Germany's DAX declined 0.3%, France's CAC dropped 0.5%, and the U.K.'s FTSE 100 was down 0.7%.

U.S. government bond prices came under pressure after the Fed announced plans to widen its efforts to support corporate credit markets. The benchmark 10-year U.S. Treasury yield climbed to 0.701% from 0.698% Friday.

Spot gold fell $5.00 (-0.3%) to $1,724 an ounce.

U.S. WTI crude oil futures (July) gained 2.4% to $37.12 a barrel.

On the forex front, the ICE U.S. Dollar Index retreated 0.7% on day to 96.62, following a two-day rebound.

EUR/USD bounced 0.7% to 1.1328. Later today, German ZEW Current Situation Index for June will be released (-83.0 expected).

GBP/USD advanced 0.6% to 1.2620. U.K. Prime Minister Boris Johnson said he "sees no reason" why his country and the European Union can not reach an agreement by July. Meanwhile, investors will focus on the U.K. jobless rate for the three months to April due later in the day (4.7% expected).

USD/JPY was little changed at 107.40. The Bank of Japan is expected to keep its benchmark rate unchanged at -0.10% later today.

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