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Markets Update: APAC stocks gain on global risk sentiment - US stocks rally on strong data, dovish ECB hike, PBoC RRR cut, and Arm IPO; ECB's more hawkish rate-setters believe rates could rise again in December
Economic Calendar
Global Markets Roundup: 15 Sep 2023
APAC stocks gained on Friday, following the gains in US stocks. The Hang Seng index rose 1.3%, and the Shanghai Composite index climbed 0.8%. The gains were supported by the positive sentiment in global markets, as well as the encouraging Chinese activity data. The NBS said that the economy saw accelerated demand in April, but domestic demand remains insufficient.
US stocks rallied on Thursday, boosted by strong economic data, a dovish ECB rate hike, the PBoC's RRR cut, and the blockbuster Arm IPO. The S&P 500 rose 1.6%, the Dow Jones Industrial Average gained 1.1%, and the Nasdaq Composite climbed 2.2%. The data showed that the US economy grew at a faster pace than expected in the first quarter, while consumer confidence also improved. The ECB raised interest rates by 25 basis points, but the move was less than some had expected. The PBoC cut the reserve requirement ratio for banks, which is expected to boost lending. And the Arm IPO was the biggest in London in over a decade.
ASX 200 boosted by miners, rate hike expectations wane
The Australian stock market was boosted on Friday, with miners leading the gains. The Reserve Bank of Australia (RBA) watcher McCrann recently said that there will likely be no more rate hikes, which helped to boost sentiment. The RRR cut in China, which is expected to release over CNY 500bln of liquidity, also supported the market.
Nikkei 225 extends gains, SoftBank boosted by Arm IPO The Japanese stock market extended its gains on Friday, with power companies outperforming. SoftBank was boosted after shares in its Arm unit climbed 25% in its US debut. Hang Seng and Shanghai Comp initially underpinned by Chinese activity data, but Shanghai Comp later fades into the red The Hong Kong and Shanghai stock markets were both initially underpinned by the encouraging Chinese activity data. Industrial Production and Retail Sales both topped forecasts. However, Shanghai Comp later faded into the red as investors took profits.
DXY holds on to gains above 105.00 The dollar index held on to its gains above 105.00 on Friday, supported by the hawkish stance of the Federal Reserve. The euro languished around a 6-month low, while the yen weakened against the dollar. Several of the ECB's more hawkish rate-setters believe that rates could rise again in December, in the scenario of hot wages and inflation, according to a report by the Financial Times. The report said that these rate-setters believe that the ECB needs to be "pre-emptive" in its monetary policy tightening, in order to prevent inflation from becoming entrenched.
FX
The dollar index (DXY) marginally softened but held on to most of the prior day's gains above the 105.00 level, supported by strong US data and weakness in its transatlantic counterparts.
The euro (EUR) languished around a 6-month low against the dollar in the aftermath of the dovish European Central Bank (ECB) rate hike, where the central bank's language suggested that it could be at the end of its hiking cycle.
The pound (GBP) was uneventful, although it was off worse levels after rebounding off a floor at the 1.2400 level.
The US dollar (USD) against the Japanese yen (JPY) traded rangebound after it held its ground against the recent dollar strength.
The Australian dollar (AUD) and New Zealand dollar (NZD) were underpinned by the constructive mood and improved Chinese activity data.
The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.1786, slightly weaker than the previous day's fix of 7.1874.
FIXED INCOME
10-year US Treasury (UST) futures were contained after the recent strong US data releases and the heightened risk appetite.
German bund futures traded quietly but retained the majority of the spoils following the ECB's dovish rate hike.
10-year Japanese government bond (JGB) futures eked mild gains, with price action uneventful amid the lack of data or fresh catalysts for Japan and the absence of additional Bank of Japan (BoJ) purchases.
COMMODITIES
Crude oil futures continued to climb after WTI crude futures recently rose back above USD 90/bbl to their highest level YTD amid expectations for tight supply, with tailwinds from the risk appetite and better-than-expected Chinese data.
US President Joe Biden said he is going to get gas prices down again.
US Presidential Energy Security Adviser Amos Hochstein said they are seeing record oil production in the US and will continue to refill the Strategic Petroleum Reserve (SPR), while he added that Libyan floods are impacting oil production there.
Qatar set November-loading Al-Shaheen crude term price at about USD 2.73/bbl above Dubai quotes.
Spot gold was supported in tandem with the upside across the commodities complex.
Copper futures were supported by China's improved activity data and recent RRR cut.
Looking ahead The key economic events to watch on Friday are French and Italian CPI (Final), EZ Labour Costs, Italian Trade Balance, US UoM Sentiment, NY Fed Manufacturing, Import and Export Prices, BoE/IPSOS Inflation Attitude Survey, ECB TLTRO Repayment Publication, Speeches from ECB's Lagarde and CBR's Nabiullina, and Quad Witching.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team