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Markets Update: Asian Markets Wobble, Await RBA Decision; China Recovers After Early Selloff.
Economic Calendar
Global Markets Roundup: 05 Feb 2024
APAC stocks remained mostly subdued on Monday, following a strong showing in the US last week, as investors awaited fresh guidance on monetary policy and digested news of US-led strikes in Yemen. Chinese regulators reiterated their commitment to stabilizing the market, offering some support to sentiment. European equity futures suggest a flat open, following a positive close on Friday. Major currencies saw limited movement, with the DXY hovering around 104, EUR/USD below 1.08, and USD/JPY fluctuating near 148.50. Geopolitical tensions remain elevated after US and UK airstrikes against Houthi targets in Yemen, with further action promised by the White House. Fed Chair Powell reaffirmed his stance that March is likely too early to consider rate cuts, dampening hopes for an immediate policy shift. Chinese regulators reiterated their commitment to maintaining market stability, providing some comfort to investors. Earnings season continues with reports expected from Vodafone, McDonald's, NXP Semiconductors, and Caterpillar.
ASX 200 Retreats: Australian stocks closed lower on Friday, dragged down by a weak performance in commodity-related sectors. Investors remained cautious ahead of the Reserve Bank of Australia's (RBA) interest rate decision tomorrow. Despite positive Services and Composite PMI data, both readings remained in contraction territory, adding to concerns about the state of the Australian economy. Nikkei 225 Buoyed by Yen: Japan's Nikkei 225 finished higher, supported by the recent depreciation of the Yen. Individual stock movement was largely driven by company earnings reports. China Recovers After Early Plunge: Both the Hang Seng and Shanghai Composite indices initially plummeted in early trading, extending the recent equity rout in China. Despite the People's Bank of China's (PBoC) previously announced Reserve Requirement Ratio (RRR) cut taking effect and assurances from the securities regulator to stabilize the market, concerns about slowing economic growth continued to weigh on sentiment. However, both indices managed to recover later in the session, briefly turning positive before closing flat or slightly lower. Europe Set for Quiet Start: European equity futures suggest a muted open for the continent's markets, with the Euro Stoxx 50 future flat after Friday's positive close.
FX:
Dollar Holds High Ground: The DXY maintained its strength around 1.04, boosted by last week's strong US jobs report and Fed Chair Powell's hawkish stance.
EUR/USD Languishes: The euro remained below 1.08, pressured by robust US wage data and rate cut hopes fading.
GBP/USD Finds Support: Sterling held steady around 1.26, finding temporary respite at the key support level.
USD/JPY Takes a Breather:Â The yen pair consolidated near 148.50 after its recent surge on dollar strength.
AUD and NZD Flounder:Â AUD and NZD lacked direction after losses and with the RBA meeting underway.
China Devalues Yuan: PBoC weakened the yuan to 7.1070 against expectations, signaling potential economic concerns.
Turkey Gets New Central Bank Chief: Fatih Karahan vows to fight inflation and maintain tight monetary policy. Turkish lira receives support with introduction of interest payments on reserves.
Fixed Income:
US Treasuries Extend Losses:Â 10-year UST futures continued lower after last week's hawkish Fed sentiment.
Bund Futures Subdued:Â German bond yields remained muted ahead of key trade data.
JGBs Track Global Downside: Japanese 10-year yields follow global peers lower, mixed results in inflation-linked JGB auction.
Commodities:
Crude Oil Rangebound:Â Prices stall as geopolitical risks and cautious sentiment outweigh specific energy catalysts.
Gold Subdued:Â The precious metal remains pressured after Friday's decline on strong US jobs data.
Copper Stagnant: The industrial metal holds steady, weighed down by weak demand and Chinese market sell-off.
Looking Ahead:
Investors will be closely watching for any further developments on the monetary policy front, as well as the ongoing geopolitical situation in Yemen.
Economic data releases and corporate earnings will also be in focus, providing investors with further insights into the health of the global economy.
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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