From Marc Chandler at Bannockburn Global Forex:
Overview: Speculation that a midday statement by China's Politburo signals new efforts to support the economy ahead of next week's holiday appears to have stirred the animal spirits. The unusual timing of the statement helped spark a rally in Asia-Pacific that lifted most of the large market by more than 1%. Europe's Stoxx 600 has nearly completed the gap created by Monday's sharply lower opening. It is rising for the third consecutive session. US futures are, however, struggling, after some earnings disappointments. The 10-year yield was virtually flat on the week coming into today and is up five basis points to 2.87%. European benchmark yields are up 2-4 bp. The dollar is heavier across the board. Among the majors, the Scandis and Australian dollar are leading the way. Among emerging market currencies, only the Turkish lira is unable to gain on the greenback.
Gold is extending yesterday's recovery off the $1872 area and has approached resistance near $1920. June WTI is making nine-day highs, almost to $107. US natgas is off a little after yesterday's 5.2% decline. Still, this just pares the gains from earlier in the week, leaving it up around 5%. Europe's benchmark is up 2% and about 4.5% for the week. Iron ore prices rose 3%. Although it was, the fourth consecutive gain, it finished 2.8% lower on the week. Copper is up almost 1% to recoup yesterday's loss, leaving it off 2.7% this week. July wheat is firm closing in on a nearly 2.5% gain for the week.
Asia Pacific
It was unusual for China's Politburo to make a midday statement, but it did, and it gave the statement greater sway. It pledged to meet economic target (5.5% GDP this year), and many took it as a signal that more stimulus will be forthcoming. Earlier this week, President Xi seemed to make similar allusions, that all-out efforts were needed and emphasized infrastructure projects. Separately, talks with the US about on-site audits of Chinese companies also was supportive of Chinese tech companies and the gave the Hang Seng an extra boost. China's mainland markets are closed until next Thursday. Over the weekend, the "official" PMI will be reported. The composite fell below the 50 boom/bust level in March and likely remained below there in April.Japanese markets were closed today and re-open Monday, but then are on holiday again Tuesday through Thursday. The economic highlight next week is the Tokyo CPI at the end of the week. It is expected to jump sharply as last year's decline in mobile phone service costs drop out of the 12-month comparisons. It is worth around one percentage point. The Reserve Bank of Australia meets next week and that higher-than-expected Q1 CPI has fanned speculation of a small hike to begin the tightening cycle. The market appears to have fully discounted a 15 bp move that would bring the cash target to 0.25%....
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