From Marc Chandler at Bannockburn Global Forex:
Overview: The sharp sell-off of US equities yesterday weighed on global equities today. The Asia Pacific bourses were a sea of read with many of the large markets off 2%-3%. Japan, which returned from a three-day holiday was the exception and it managed to eke out a small gain. Europe's Stoxx 600 gapped lower after yesterday's outside down session and US futures are trading around 0.3%-0.5% lower. Meanwhile, the US 10-year yield is ending further above the 3% threshold, while European benchmarks are mostly 3-4 bp higher. Here UK Gilts are an exception with the 10-year yield a couple of basis points lower. The dollar is mixed. The Scandis and euro are firm, while the Australian dollar, Japanese yen, and sterling are heaviest. Among emerging market currencies, most central European currencies are higher as is the peso. Asian currencies and the Turkish lira are sporting modest losses.
Gold is closing in on its third weekly loss and is trading around $1882. June WTI is flirting with $110. It has not closed above it since March 25. US natgas is extending its advance for a sixth session. It is up about 23.5% this week after rising nearly 11% last week. Europe's natgas benchmark is off 5.6% today to halt a four-day advance. It is up 6.6% this week and was up almost 3.2% last week. Iron ore slumped 4.7% today and is off nearly 5.9% on the week, its third consecutive weekly loss. Copper is a little heavier after reversing lower yesterday to lose 1%. It is off 2.7% this week after having fallen in the past two weeks. July wheat has come back lower after rallying around 5.8% in the past two sessions. It is up nearly 4% net this week.
Asia Pacific
Tokyo's April CPI jumped to 2.5% from 1.3%. This was a touch higher than expected. The two key drivers were energy prices and the base effect from the cut in last year's mobile phone charges. Excluding fresh food prices, Tokyo's CPI rose to 1.9% from 0.8%. Excluding fresh food and energy, Tokyo's consumer prices rose by 0.8% from -0.4%. Energy prices are up about 25% year-over-year and lifted overall rate by 1.1 percentage points. The mobile phone charges added 0.8%. While influences of the Tokyo CPI will be evident in the national figures due out later this month, the BOJ insists on looking through the data on the grounds that the current spurs are not sustainable. Wage growth is not strong enough. At the same time, the new economic package is projected to lower inflation by 0.5 percentage points from May through September.
The US appears to be getting close to adding China's Hikvision to the "Special Designated Nationals and Blocked Persons list on human rights violation grounds. Hivision sells surveillance software to governments and corporations, including CCTV cameras. Although it operates globally with some 53k employees, its biggest customer is China itself. While the US has been escalating and expanding its use of sanctions since 9/11, one of the things that draws attention to Hikvision, in addition to its size, is that the category of violations, human rights, could very broad and elastic. Meanwhile, we note that a bill passed the Senate committee stage yesterday that would allow the US to sue OPEC for manipulating the energy market. The White House expressed concerns but has not formally opposed it yet.Beijing announced that all government and state-sponsored businesses should replace all foreign brand personal computers with domestic ones within two years. This is the latest effort by Beijing to reduce its reliance on foreign technology. Estimate suggest there are some 50 mln personal computers at the central government alone. The shares of many of non-Chinese brands sold-off on the news. Note too that has been an effort elsewhere to reduce the use of Lenovo PCs, which is a Chinese brand....
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