Early Action in Stocks, Dollar/Yen and Treasurys Indicates Risk is Back-on

James Hyerczyk
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Asian stocks are trading higher on Friday, the last trading day of the quarter as investors try to keep up with Wall Street’s gains on Thursday. The major indexes in Japan and South Korea were under pressure early before mounting a late session recovery.

At 0424 GMT, Japan’s NIKKEI is trading 22296.89, up 26.50 or +0.12% and South Korea’s KOSPI is at 2320.54. +6.30 or +0.27%. Australia’s ASX 200 Index is at 6216.00, up 0.60 or +0.01%.

U.S. Equity Markets

Investor sentiment is also improving in the U.S. during the pre-market futures session. At 0429 GMT, the benchmark September E-mini S&P 500 Index is trading 2729.25, up 10.00 or +0.37%. The blue chip September E-mini Dow Jones Industrial Average is trading 24347, up 127 or +0.52% and the tech-driven September E-mini NASDAQ-100 Index is at 7096.00, up 35.50 or +0.50%.

The U.S. stock indexes are following through to the upside after Thursday’s strong recovery from the week’s lows was driven by strong rallies in bank and technology stocks.

The three major equity indexes were under pressure early Thursday as trade tensions between the U.S. and some of its biggest trade partners mounted. However, following the release of the Fed’s latest bank stress data, shares of J.P. Morgan, Goldman Sachs, Citigroup, Morgan Stanley and Bank of America all rose more than 1 percent lifting the financials sector.

The weakest group of the session was the Health Care Sector. It declined after Walgreens Boots Alliance and CVS Health dropped 9.9 percent and 6.1 percent, respectively after Amazon announced it had bought PillPack, an online pharmacy.

U.S. Treasury Markets

Treasury yields are moving higher early Friday, a strong indication that today will be a risk-on session in the financial markets. On Thursday, yields trended lower early in the session on trade war worries and following the release of weaker than expected U.S. GDP data. September 10-Year U.S. Treasury futures rose to their highest level since May 31 as investors continued to use government debt as a safe-haven investment.

Forex

The USD/JPY is continuing to recover nicely from a two-week low reached earlier in the week. The Dollar/Yen is now in a position to challenge the high of the month reached at 110.905 on June 15. Taking out this level will reaffirm the uptrend. Today’s price action also indicates increasing appetite for risk.

This article was originally posted on FX Empire

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