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Markets Update: APAC Stocks Edge Higher, China Industrial Production Tops Expectations, Retail Sales Disappoints.
Economic Calendar
Global Markets Roundup: 15 Dec 2023
Asia-Pacific stocks traded mostly higher following the positive lead from Wall Street as US yields continued to decline. Chinese Industrial Production figures topped expectations, rising 6.9% year-on-year in November, while Retail Sales growth disappointed despite posting double-digit percentage growth. European equity futures are indicating a higher open, with the Euro Stoxx 50 futures up 0.2%, after the cash market closed up 0.2% yesterday. The US Dollar Index (DXY) hovers around the 102 mark, the EUR/USD pair lingers just below 1.10, and the USD/JPY sits around the 142 level.
ASX 200 was led higher by the commodity-related sectors after gains in oil and metal prices which helped the index shrug off the latest flash PMIs from Australia which slightly improved but remained in contractionary territory. Nikkei 225 was lifted at the open and briefly returned to above the 33,000 level amid the global risk-on mood. Hang Seng and Shanghai Comp were varied with notable outperformance in the Hong Kong benchmark amid tech strength although the mainland lagged after mixed Chinese data in which Industrial Production topped estimates but Retail Sales disappointed despite showing double-digit percentage growth, while House Prices continued to decline and attention was also on the PBoC which maintained its 1-year MLF rate at 2.50% but delivered a record net injection through the facility.
FX DXY remains around the102.00 level after the fallout from the Fed's dovish pivot despite the recent stronger-than-expected US Retail Sales and lower Jobless Claims, while the greenback was also pressured by strength in its major counterparts across the pond following the slew of central bank decisions which were much less dovish than the FOMC. EUR/USD was kept afloat near the 1.1000 level after strengthening in the aftermath of the ECB meeting, while sources noted the central bank is largely united on forecasting rate cuts later than market bets and officials do not expect to revise their stance before March. GBP/USD took a breather after its post-BoE outperformance where the message was that policy will need to remain restrictive. USD/JPY was choppy and ultimately slipped back beneath the 142.00 handle owing to the recent fall in US yields. AUD and NZD were initially underpinned by the positive risk appetite and firmer yuan reference rate setting. PBoC set USD/CNY mid-point at 7.0957 vs exp. 7.1132 (prev. 7.1090). Mexican Central Bank kept its Interest Rate at 11.25%, as expected, while it lifted its inflation forecasts for 2024 and maintained its guidance that the reference rate must be held at its current level for some time. Brazil’s Finance Minister Haddad said extended tax exemption on payrolls was not included in the 2024 budget and it would be difficult to deliver it, while an alternative measure to extended tax exemption on payrolls will be presented this year.
FIXED INCOME
10-year UST futures marginally eased back following the prior day’s bull flattening as strong retail sales, lower jobless claims and a less dovish ECB, capped the front-end's post-FOMC rip. Bund futures continued to fade their recent rally with prices back below the 136.00 level. 10-year JGB futures followed suit to the pullback in global peers amid the absence of additional BoJ buying.
COMMODITIES
Crude oil futures are marginally firmer amid the positive risk appetite with Brent and WTI crude futures eyeing the USD 77/bbl and USD 72/bbl levels, respectively, after the recent rebound in oil prices from a six-month trough. Qatar reportedly sells February-loading cargoes at discounts and lowest levels in years, according to Reuters sources. A disagreement between Shell (SHEL LN) and Venezuela's PDVSA over future LNG prices has gridlocked talks on a license for Shell and Trinidad's National Gas Company to operate a Venezuela gas field, according to Reuters citing sources. Spot gold lacked direction with price action rangebound after plateauing north of USD 2030/oz. Copper futures traded sideways but held on to most of the prior day's spoils and remained near USD 3.90/lb. Workers at Chile's Centinela Copper mine approve contract offer which ends the risk of strike, according to Reuters.
Looking ahead, key highlights include:
Eurozone, UK, and US Purchasing Managers' Index (PMI) (Flash) figures
Eurozone Trade Balance
US Capacity Utilisation Rate
US Industrial Production
US New York Fed Manufacturing Index
Quad Witching
Central Bank of Russia (CBR) Policy Announcement
Bank of England (BoE)'s Chief Economist Andrew Ramsden speech
Bank of Canada (BoC) Governor Tiff Macklem speech
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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