_edited_edited.png)
Markets Update: APAC markets mixed as renewed deflation concerns weigh on Chinese equities
Today's important market events:
No major market events/reportrs expected.
Global Markets Roundup: 10 Jul 2023
After the severe end-of-week sell-off, Asia markets were mixed on Monday, with the Hang Seng opening higher by more than 2% on news that Ant Financial and Tencent had been fined by Chinese regulators. However, gains were pared after China released weak inflation data, renewing concerns about the country's economic outlook.
The Consumer Price Index (CPI) was flat year-on-year in June, while the Producer Price Index (PPI) fell by 6.1% year-on-year. These figures suggest that inflation in China is still under control, but they also raise concerns about the country's economic growth.
In other news, the Bank of Japan (BOJ) unexpectedly announced that it would conduct repo operations on Monday and Tuesday. This move is seen as an attempt to calm rising Japanese government bond yields.
Meanwhile, US Treasury Secretary Janet Yellen's visit to Beijing did not produce any concrete results, but it appears to have helped to calm tensions between the two countries.
Australia's ASX 200 index opened flat, while South Korea's Kospi index was also flat.
In Japan, the Nikkei 225 index opened slightly lower after the Bank of Japan (BOJ) announced that it would conduct two repo operations on Monday and Tuesday.
The BOJ also said that it would offer to buy 5-10 year JGBs at a fixed rate of 50bps.
The moves by the BOJ are seen as an attempt to keep long-term interest rates low and support the Japanese economy. In other news, US Treasury Secretary Janet Yellen wrapped up her four-day visit to China on Sunday. Yellen said that the talks with Chinese officials were "candid, in-depth, pragmatic, and constructive." Yellen also said that the US and China are "committed to maintaining open lines of communication."
The US dollar index (DXY) was marginally firmer on Monday, providing some reprieve from post-NFP losses. However, price action remained contained as participants looked ahead to the US CPI data mid-week. The euro (EUR) traded rangebound against the dollar, holding on to Friday's gains.
The single currency was unmoved by comments from ECB officials, who reiterated their view that inflation has peaked.
Sterling (GBP) pulled back from around year-to-date highs, but remained supported by the Bank of England's (BoE) hawkish stance. BoE Governor Andrew Bailey reiterated his commitment to raising interest rates in order to control inflation.
The Japanese yen (JPY) nursed some of last week's late losses, edging closer towards the 143.00 handle. The yen was supported by expectations that the Bank of Japan (BoJ) will continue to pursue an ultra-loose monetary policy. The Australian dollar (AUD) and New Zealand dollar (NZD) were pressured in the aftermath of softer Chinese inflation data. The data also weighed on the Chinese yuan (CNY), which fell to its lowest level against the dollar since May 2020. The PBoC set the USD/CNY mid-point at 7.1926, weaker than the previous day's fix of 7.2132.
Crude oil futures gave back some of last week's gains as risk appetite remained contained and China data disappointed. Kuwait's Oil Minister said that Kuwait and Saudi Arabia have exclusive rights in the Durra Gas Field and that Iran should unilaterally demarcate its maritime borders in accordance with international law. The US Department of Energy (DoE) issued a request on Friday for proposals to purchase another 6 million barrels (mbbls) for the Strategic Petroleum Reserve (SPR) for October and November.
Gold prices were contained as the US dollar nursed some of Friday's losses and with US inflation data due mid-week. Copper prices reversed initial gains after the Chinese inflation data further emphasized a slow economic recovery.
Overall, Asian markets were mixed on Monday, with Chinese stocks leading gains. Investors are awaiting the release of US inflation data later this week, which will be a key indicator of the health of the US economy.
Looking ahead
Tue AU Business & Consumer confidence
Wed RBA Gov Lowe speech on RBA Review of Monetary Policy; Japan PPI + Core Machine Orders
Wed RBNZ rate decision [last week 25/25 of surveyed economists saw the OCR being unchanged at 5.50%)
Thu CN Balance of Trade
Wed US CPI
Thu US PPI; Initial jobless claims
Fri Japan Industrial Production (final)
Fri night US Consumer Sentiment; US Q2 bank earnings reports begin
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team