Capital rotation drives the US dollar weaker, Asia-Pacific stock markets rise broadly, gold approaches the 5000 mark, silver touches the 99 level.
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Global capital is accelerating its embrace of Asian markets, which have more attractive valuations and resilient growth. Asia-Pacific stock markets broadly rose on Friday, with the MSCI Asia-Pacific Index steadily climbing. Chip stocks performed particularly well.
Asia-Pacific stock markets mostly rose on Friday, with the semiconductor industry chain continuing the enthusiasm from the previous day. Leading stocks such as Japan's equipment manufacturers and South Korea's Samsung Electronics recorded strong gains. The MSCI Asia-Pacific Index rose 0.5%, with more than twice as many stocks rising as falling.
(Samsung Electronics rose 1.7%)
The Nikkei 225 Index rose 0.34%, and Australia's S&P/ASX 200 Index was once up 0.45%. Notably, the Korean Composite Index, which just broke through the historic 5,000-point mark the previous day, continued its strong performance, rising as much as 1.4% during trading.
(KOSPI stays strong, up 0.9%)
Analysts believe that the temporary easing of the US-Europe trade war alert has significantly boosted global investors' risk appetite and accelerated a potential deeper rotation of assets.
Due to concerns about the unpredictability of US policy, capital is gradually flowing out of overvalued US assets into more attractively valued Asian markets with relatively distant geopolitical risks. This rotation has directly led to a weaker US dollar and provided strong upward momentum for Asia-Pacific stocks and assets such as precious metals.
Mabrouk Chetouane, Global Market Strategy Director of Natixis IM Solutions stated:
Asia is far from geopolitical centers like the US, EU, and Latin America, and this distance acts as a barrier, allowing investors to diversify their exposure to risk assets.
Notably, the focus in Asian markets will be on the Bank of Japan's interest rate decision, which is expected to keep the policy rate unchanged at 0.75%. Previously, Prime Minister Sanae Takaichi's plan to increase spending triggered market turmoil, so the BOJ's policy statement will be closely watched.
After recording its largest drop in a month in the previous session, the US Dollar Index remained weak in the Asian session, giving a boost to dollar-priced commodities.
(US Dollar Index weakly rebounds)
Peter Grant, Senior Metals Strategist at Zaner Metals, said:
In the current macro environment, demand for gold is supported by the trend of dollar depreciation. Short-term pullbacks may be viewed as buying opportunities, and gold is expected to break through $5,000/ounce, or even higher.
Spot gold prices surged accordingly, breaking through $4,960/ounce during trading to reach another record high, while silver also hit a record high and briefly touched the $99 mark.
(Spot silver soared 2.5% in early trading, spot gold up 0.75%)
Spot platinum rose nearly 2% intraday, then fell back to near yesterday's closing price.
(Spot platinum surged and then retreated)
Precious Metals Market Outlook Remains Positive
Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, stated that geopolitical tensions, weakness in the US dollar, and expectations of Fed rate cuts this year are all part of the macro trend of de-dollarization and continue to affect gold demand.
The market expects the Fed will implement two 25-basis-point rate cuts in the second half of this year, which enhances the appeal of yield-free gold.
Meanwhile, spot silver and platinum have shown even stronger gains. Nikos Tzabouras, Senior Market Analyst at Tradu, said silver’s fundamental narrative is even more attractive than gold’s.
He pointed out that while silver may not be a reserve asset like gold, it still benefits from safe-haven inflows and a weak dollar.
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