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Monday Morning Coffee - Markets Update - 11 Sep 2023 - APAC Stocks Mixed as Yields Climb
- The Trade Academy Team
- Sep 11, 2023
- 3 min read
Markets Update: APAC Stocks Mixed as Yields Climb - Japan Signals End to Negative Rates, Yen and Yuan Rally as Vietnam Takes Center Stage in US Supply Chains.
Economic Calendar
Global Markets Roundup: 11 Sep 2023
Asian stock markets were mixed on Monday, as yields climbed following comments from Bank of Japan (BoJ) Governor Haruhiko Ueda.
Ueda said the BoJ cannot rule out that they might have sufficient data by year-end to determine whether they can end negative rates. The comments were interpreted as a signal that the BoJ is open to the possibility of policy normalization, which boosted yields in the short-term.
The Nikkei 225 in Japan rose 0.4%, while the Hang Seng Index in Hong Kong fell 0.3%. The Shanghai Composite Index in China was little changed.
Chinese Inflation Data Softens
Chinese inflation data showed headline CPI Y/Y was softer than expected but no longer in deflationary territory. The data showed that headline CPI rose 2.1% year-on-year in June, down from 2.5% in May. However, the reading was still above the BoJ's 2% target.
European Equity Futures Higher
European equity futures were indicative of a slightly higher open, with the Euro Stoxx 50 future up 0.1%. The gains in European futures were supported by the stronger euro.
DXY on the Backfoot, JPY Leads
The US dollar (USD) was on the backfoot against its major counterparts, as the euro (EUR) and Japanese yen (JPY) rose. The USD weakened after Ueda's comments, which boosted risk appetite and weighed on the safe-haven USD.
The EUR/USD exchange rate was back on the 1.07 handle, while the GBP/USD exchange rate was back on the 1.25 handle.
ASX 200 Rangebound, Nikkei 225 Subdued
The Australian stock market (ASX 200) was rangebound on Monday, with gains in the top-weighted financial industry making up for the underperformance in the tech and healthcare sectors.
The Nikkei 225 in Japan was subdued after the comments from Bank of Japan (BoJ) Governor Haruhiko Ueda, which lifted the 10-year Japanese government bond yield to above 0.70% for the first time since 2014. However, further downside in the index was stemmed as banks were lifted on the exit-related talk and with Japan aiming to take drastic economic stimulus measures.
Hang Seng and Shanghai Comp Varied The Hong Kong stock market (Hang Seng) and the Shanghai Composite Index in China were varied on Monday. The Hang Seng was pressured as last Friday's losses caught up to the index following the black rainstorm closure and with declines led by weakness in the property sector. Alibaba shares also suffered after its former CEO Daniel Zhang stepped down from the cloud business. Conversely, the Shanghai Composite was kept afloat following somewhat mixed inflation data from China, which showed headline CPI Y/Y was softer than expected but no longer in deflationary territory. The latest loans and financing data also topped forecasts, while China's National Administration of Financial Regulation also eased rules for insurers to buy stocks. Overall, the mood in the Asian stock markets was cautious, as investors weighed the mixed economic data from China against the prospect of the BoJ ending its ultra-loose monetary policy.
FX
The US dollar (USD) weakened against its major peers on Monday, as investors awaited the release of US inflation data on Wednesday.
The euro (EUR) was marginally firmer and traded back above the 1.0700 level, while the British pound (GBP) just about reclaimed the 1.2500 status alongside the softer greenback.
The Japanese yen (JPY) retreated beneath the 147.00 handle in reaction to comments from Bank of Japan (BoJ) Governor Haruhiko Ueda, who said the BoJ cannot rule out that they might have sufficient data by year-end to determine whether they can end negative rates.
The Australian dollar (AUD) and New Zealand dollar (NZD) climbed alongside gains in the Chinese yuan (CNY), after the PBoC set the strongest fix signal on record.
FIXED INCOME
US Treasury yields were lower, as investors awaited the release of US inflation data on Wednesday.
German bund yields were subdued below the 131.00 level, while Japanese government bond (JGB) yields slumped at the open owing to Ueda's comments.
COMMODITIES
Crude oil futures were lacklustre amid the mixed risk appetite and as prices largely ignored several supply-related headlines from over the weekend.
Spot gold edged marginal gains as the precious metal benefitted from the softer greenback.
Copper futures traded slightly higher in some mild reprieve from last week's selling pressure.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team