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Markets Update: APAC Stocks Mixed; NFP due later today
Economic Calendar
Global Markets Roundup: 01 Sep 2023
APAC stocks traded mixed on Friday, following a similar lead from Wall Street. Hong Kong markets were closed due to Typhoon Saola. The PBoC announced that it would cut the foreign exchange reserve requirement ratio (RRR) by 2 percentage points to 4% from September 15th.
This is the first cut in the RRR since April 2020. The move is expected to boost liquidity in the Chinese economy and support economic growth. The DXY traded choppily within a tight range but was knocked to session lows after the PBoC announcement. The Yuan strengthened against the dollar, but later pared back some of its gains.
SoftBank's Arm Holdings is expected to set a price range for its IPO next week, with plans to price its shares on September 13th and trading to start the following day.
The IPO is expected to be one of the largest in history, with a valuation of up to $60 billion.
European equity futures are indicative of a flat/firmer open with the Euro Stoxx 50 future +0.1% after cash markets closed lower by 0.4% on Wednesday.
The ASX 200 declined further under 7,300, weighed by its metals names as Fortescue Metals slumped after its CFO left three days after the CEO's departure. The Nikkei 225 opened in the red but quickly trimmed losses with the rebound spearheaded by the energy sector. The KOSPI was underpinned by the South Korean trade data which printed better than feared. The Shanghai Composite opened firmer after large Chinese banks cut their deposit rates, while the PBoC also lowered down payment for first and second-time home buyers and announced a cut to the FX RRR. Modest upticks were seen after the Caixin PMI Finals were surprisingly revised into expansion territory.
US Equity Futures
US equity futures traded flat with a slight upward bias in the run-up to the US jobs report.
European equity futures are indicative of a flat/firmer open with the Euro Stoxx 50 future +0.1% after cash markets closed lower by 0.4% yesterday.
FX
The US dollar index (DXY) traded choppily within a tight range. The modest strength seen earlier in the session was wiped out amid the Yuan strength after the PBoC announced it is to cut its FX RRR by 2ppt, although that Yuan strength later pared back.
On the announcement, the USD/CNH immediately moved lower from levels around 7.2700 towards 7.2550 before extending losses to a 7.2394 APAC low and thereafter rising back to pre-announcement levels. The euro (EUR) traded in tandem with the dollar, with the EUR/USD back around 1.0850 as technicians eye its 200-day moving average (DMA) (1.0815) for the next support. The British pound (GBP) similarly languished around the prior day's trough (1.2650), with Cable also seeing a modest and brief leg higher from the aforementioned Dollar pullback. The Japanese yen (JPY) benefitted from the PBoC headlines and fell under the 145.50 mark after seeing no notable reaction to the decline in Q2 Japanese business capex and to the modest revision lower in August manufacturing PMI. The Australian dollar (AUD) and New Zealand dollar (NZD) were subdued at the start of the session, but the APAC currencies were briefly boosted in tandem with the Yuan amid the PBoC FX RRR cut, although AUD/USD found overnight resistance at 0.6500.
FIXED INCOME
10-year US Treasury futures traded sideways in a tight range in the run-up to the jobs data, and after the curve was bid across the board yesterday, with some citing month-end.
German bund futures were uneventful and found overnight support at levels near 133.00 as the contract held onto yesterday's gains.
10-year Japanese government bond (JGB) futures held an upward bias amid tailwinds from Western counterparts, with the corresponding JGB yield dipping under 65 basis points (bps) around the open.
COMMODITIES
Crude oil futures were on a slightly firmer footing and extended on the prior session's gains, with Brent testing 87 USD per barrel to the upside as it takes aim at the August high of 87.37 USD per barrel.
Spot gold saw an uptick as the DXY pulled back but price action remains within yesterday's range and under 1,950 USD per ounce ahead of NFPs.
Copper futures were lifted on the aforementioned China announcement, with 3-month LME copper briefly topping 8,500 USD per tonne to the upside.
Chevron's Australia LNG workers rejected the company's bargaining offer, according to unions; less than 1% of the Wheatstone and Gorgon downstream workforce voted in support of the offer, according to Reuters.
Russia introduced a 7% export duty on a number of fertilizers from September 1st, according to Interfax.
Looking Ahead the main economic releases for the day include:
UK Nationwide house prices
Eurozone, UK, US manufacturing PMI final
US jobs report
Canadian GDP
US ISM manufacturing
Speeches from Fed's Bostic & Mester, ECB's Vujcic.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team