US stocks continue their bullish ascent driven by strong economic data. Asian markets trade cautiously amid tariff uncertainties and local liquidity issues. The US dollar gains strength.
US dollar sideways, and Asia equities drifted lower over US tariff deadline
The US stock market continued to thrive in a bullish momentum environment on Thursday, July 3, ahead of today’s closure due to a public holiday in the US. All four major stock indices recorded positive intraday gains, with the S&P 500 (+0.8%) and the tech-heavy Nasdaq 100 (1%) scaled to another all-time high. The small-caps Russell 2000 advanced by 1% while the Dow Jones Industrial Average trailed behind with a rally of 0.8% to close at 44,828, just a whisker away from its current record intraday high of 45,074 printed on 4 December 2024.
The current bout of optimism in US equities has been driven by better-than-expected key US economic data (non-farm payroll and ISM Services PMI) released yesterday that offset the negative vibes coming out of the trade tensions “wall of worry” as the 9 July deadline looms for the higher global reciprocal tariffs to kick in for US trading partners (excluding China).
Asia Pacific stock markets have traded more cautiously today as US President Trump said his administration may begin sending letters to trading partners as soon as today, 4 July, on setting respective unilateral tariff rates ahead of the 9 July deadline for negotiations.
So far, Japan, South Korea, and the European Union are still working to finalise trade deals. Trump has expressed optimism towards India but criticised Japan and threatened to slap a higher tariff rate between 30% and 35% on Japanese exports.
Hong Kong’s Hang Seng Index dropped for the second consecutive day by -0.30% to 24,000 and traded below its 20-day moving average at 23,990. In addition, the recent weakness seen in the Hong Kong stock market can also be attributed to rising fears of a short-term liquidity crunch due to the Hong Kong central bank, HKMA’s intervention in the FX market to buy up the HK dollar against the US dollar as the USD/HKD hit the upper peg limit of 7.85 in the past four sessions. These moves drain liquidity from the HK financial system and can increase borrowing costs.
Over in Singapore, the government has introduced a set of new measures to control housing prices, including raising the stamp duty for homeowners who sell their private properties within four years and increasing rates payable to 16% from 12% within the first year.
Singapore’s benchmark Straits Times Index recorded an intraday loss of -0.3% to 4,009 after three consecutive sessions of gains and a fresh record closing high of 4,019 yesterday. Its 20-day moving average is acting as an intermediate support at around 3,940.
Japan’s Nikkei 225 managed to squeeze up a marginal intraday gain of 0.15% to 39,845, holding above yesterday’s low of 39,668, supported by better-than-expected household spending data that recorded its fastest growth since August 2022 (May: 4.7% y/y, Apr: -0.1% y/y, Consensus: 1.2% y/y).
The US dollar gained yesterday after the rosy jobs market and ISM Services PMI data, which significantly reduced the odds of the third Fed interest rate cut in December to 4% from 60% (a day earlier on Wednesday), according to the CME FedWatch tool.
The US Dollar Index rallied by 0.4% on Thursday, its second consecutive session of gains to 97.13, but remained below its 20-day moving average, which is acting as an intermediate support at around 97.90.
Mixed bag of performances in today’s Asia session as the Japanese yen staged an intraday gain of 0.4% against the US dollar, while the AUD/USD traded lower by -0.05%, below the 0.6600 intermediate resistance.
Our YouTube video above contains the latest intraday technical analysis on US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
