MARKET UPDATE

Asia FX rises, Japanese yen hits over 7-mth high on BOJ speculation

Most Asian currencies advanced against the dollar on Monday, cheered largely by the prospect of smaller interest rate hikes by the Federal Reserve, while speculation over another hawkish move by the Bank of Japan pushed the yen to an over seven-month peak.

The yen rose 0.4% to 127.32 against the dollar, reaching its highest level since late-May ahead of a BOJ policy meeting later this week. The currency has been on a tear since the central bank unexpectedly struck a hawkish tone during its December meeting by widening the band within which it allows the yields on its benchmark government bonds to trade.

Yields on Japanese 10-year bonds rose above the 0.5% upper end set by the BOJ for a second consecutive day.

 

European shares edge up on pharma boost, UK’s FTSE 100 nears record-high

European shares inched up on Monday as gains in healthcare stocks helped the benchmark index extend its sharp rally thus far into the new year, while UK’s FTSE 100 hovered close to a record high.

The pan-European STOXX 600 gained 0.1% in early trading, boosted by a 0.8% rise in healthcare stocks.

Pharmaceutical companies such as Koninklijke Philips (NYSE:PHG) and Novo Nordisk (NYSE:NVO) added more than 2% each.

The pan-European index has added 6.6% since the start of the year, as warmer weather added to hopes of a milder-than-expected recession in the region and data signalled an easing of price pressures in the United States and the eurozone.

UK’s FTSE 100 rose 0.1% to 7,852.84, inching closer to a record 7,903.50.

“Investors appear to have fallen back in love with UK assets, after a difficult period when FTSE 100 was the wallflower among global indices,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

 

Air finance summit tackles jet shortages amid China travel thaw

Financiers at the centre of a $200 billion industry underpinning worldwide airline fleets are meeting in Dublin this week, gambling that China’s long-awaited decision to free travel will accelerate their recovery while warning of a shortage of jets.

Three years after the spread of COVID-19 grounded thousands of airliners, demand for air travel is booming again, boosted by Beijing’s decision last month to unwind its zero-COVID policies.

In a report on Monday, the world’s second-largest aircraft leasing company, Chinese-owned Avolon, predicted global traffic would return to pre-pandemic levels as early as June this year – months earlier than most in the industry have predicted.

“After a 70% recovery in passenger traffic last year led by … Europe and North America, Asia will drive growth in 2023, helped by the recent reopening in China,” Avolon said.

Others remain more cautious.

“Airlines are not dramatically increasing their frequency to China. It’s going in the right direction but … it’s going to take some time,” said aviation adviser Bertrand Grabowski.

“For now, I think we must think about China in a cautious way” Rob Morris, head of global consulting at Ascend by Cirium, told the Airline Economics conference, which along with a separate event hosted by Air finance Journal, brings financiers to the world’s aviation finance capital for talks each year.

“Passenger confidence is going to be a key thing,” he said.

Data so far suggests Chinese are resuming travel ahead of the Lunar New Year, despite worries about infections after Beijing ended curbs last month, with passenger traffic jumping to 63% of 2019 levels since the annual travel season began.

The crippling impact of COVID-19 saw dozens of airlines go out of business and wiped billions of dollars off balance sheets.

 

 

 

 

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