Daily Outlook

Asian shares rally as retail crowd catch silver bug

Asian shares rallied on Monday and U.S. stock futures recouped early losses as newly empowered retail investors turned their attention to precious metals, promising a respite to some hard-hit hedge funds. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.4% after four straight sessions of losses.

Japan’s Nikkei added 1.2%, after shedding almost 2% on Friday, while Chinese blue chips gained 0.5% as the country’s central bank injected more cash into money markets. Futures for the S&P 500 edged up 0.3%, having been down as much as 1% in early action, while NASDAQ futures firmed 0.1%. EUROSTOXX 50 futures added 0.6% and FTSE futures 0.2%.

Dealers noted a shift in the headline-grabbing battle between retail investors and Wall Street that led hedge funds last week to trade the most stock in a decade amid wild swings in GameStop Corp. Talk now was that silver was the new target for the retail crowd, as the metal jumped 6% to a six-month high, possibly limiting the need for distressed selling by stock funds.

Analysts cautioned this entertaining episode was really a sideshow compared with signs of a loss of economic momentum in the United States and Europe as coronavirus lockdowns bite. Indeed, two surveys from China showed factory activity slowed in January as restrictions took a toll in some regions. Neither was the news on vaccine rollouts positive, especially given doubts about whether they will work on new COVID strains.

Higher yields combined with the more cautious market mood have seen the safe-haven dollar steady above its recent lows. The dollar index stood at 90.535, having bounced from a trough of 89.206 hit early in January. The euro idled at $1.2129, well off its recent peak at $1.2349, while the dollar held firm at 104.70 yen. Gold followed silver higher to $1,862 an ounce, but has repeatedly stalled at resistance around $1,875. Oil also tracked the gains in other commodities, with U.S. crude rising 21 cents to $52.42 a barrel. Brent crude futures gained 33 cents to $55.37.

Asian shares rally as retail crowd catch silver bug, Reuters, Feb 1

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