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Markets Update: APAC Stocks Open Mixed as Investors Digest China Data
Today's important market events:
[EUR] Italian CPI (MoM - Jun) - 10:00 CEST
[USD] NY Empire State Manufacturing Index (Jul) - 14:30 CEST
Global Markets Roundup: 17 Jul 2023
Asian stocks opened mixed on Monday, as investors digested mixed economic growth and activity data from China.
China's GDP grew by 0.4% in the second quarter of 2023, slightly higher than the 0.3% growth rate expected by economists. However, the growth rate was below the 4.8% growth rate recorded in the first quarter of the year.
Industrial production in China rose by 0.7% in June, beating expectations of a 0.5% increase. However, retail sales fell by 0.1%, missing expectations of a 0.3% increase. European equity futures are indicative of a lower open, with the Euro Stoxx 50 down 0.5% after the cash market closed up by 0.2% on Friday.
The dollar index (DXY) is contained just below the 100 mark, while the euro (EUR/USD) has maintained 1.12 status. The AUD and NZD are slightly lagging peers. Crude futures were on the back foot with early headwinds from the resumption of production at Libya's largest oil field.
The ASX 200 was rangebound, with gains in healthcare and tech counterbalanced by losses in consumer and commodity-related industries. Australian Treasurer Chalmers provided a glum outlook, in which he expects a substantial economic slowdown and unemployment to increase as inflation eases.
The KOSPI was constrained by a sombre mood after the deadly floods in South Korea and lingering US concerns that North Korea will move forward with another intercontinental ballistic missile test.
The Shanghai Composite underperformed in the absence of Stock Connect flows owing to the unscheduled closure in Hong Kong and as participants reflected on the mixed bag of tier-1 releases from China. Economic growth was firmer than expected on a quarter-on-quarter (QQ) basis but disappointed on a year-on-year (YY) basis, while Chinese Industrial Production topped estimates in June and Retail Sales missed.
Furthermore, the data was seen to be distorted by the effects of the lockdowns in China last year and attention was also on the PBoC which maintained its 1-year MLF rate unchanged at 2.65%, as expected.
US equity futures were cautious owing to the similar mood in Asia after the latest Chinese data releases.
In the FX market, the DXY traded rangebound with price action contained just shy of the 100.00 level amid light newsflow from the US and after the Fed entered into a blackout period over the weekend.
The EUR/USD was uneventful in the absence of any major catalysts for the single currency which recently found a platform at the 1.1200 level.
GBP/USD lacked direction after failing to sustain the 1.3100 status and was unmoved by the UK signing a treaty to join the CPTPP Indo-Pacific trade deal, with Business Secretary Badenoch pessimistic about the chances of a free trade agreement with the US.
USD/JPY was mildly pressured and JPY-crosses retreated in the absence of Japanese participants.
The AUD and NZD alongside the subdued risk appetite, recent commodity pressure and CNY weakness. The PBoC set the USD/CNY mid-point at 7.1326 vs exp. 7.1386 (prev. 7.1318).
In fixed income, 10yr UST futures traded rangebound and found some respite from Friday’s declines which were triggered after a surge in the University of Michigan consumer survey and higher inflation expectation gauges facilitated the pullback in dovish Fed pricing, while price action overnight was also hampered by the holiday closure in Tokyo.
Bund futures were little changed and lacked direction in the aftermath of last week's late choppy performance and ahead of upcoming ECB speakers including President Lagarde.
In commodities, crude futures were on the back foot with early headwinds from the resumption of production at Libya's largest oil field and with prices not helped by activity data from China.
Libya’s El Sharara oil field and the El Feel oil field resumed production, according to Reuters.
Kuwait plans to raise oil output from 2.7mln bpd to 3.15mln bpd within four years, according to Reuters.
Saudi’s Energy Minister said they will continue to guarantee oil supply to Japan and maintain the position as the reliable partner, while he added that Saudi is Japan’s largest oil exporter fulfilling 40% of its total needs and will continue cooperating with Japan in clean hydrogen and recycled carbon fuels, according to state TV.
Japan is to ensure private sector loans for LNG procurement with Nippon Export & Investment Insurance to receive premiums from private lenders in turn for policies that will cover more than 90% of the loaned amount, with NEXI is to insure a loan by Sumitomo Mitsui Banking Corp (8318 JT) to a unit of LNG importer JERA, according to Nikkei.
Turkey raised the special consumption tax on oil and gasoline with taxes on petrol increased by about 200%, according to Official Gazette and FT.
Spot Gold languished near Friday's lows after the recent unwinding of some of the dovish Fed pricing.
Copper futures were lower with pressure seen heading into and in the aftermath of the mixed Chinese data.
Looking ahead, highlights include:
US NY Fed Manufacturing
Speeches from ECB's Lagarde, Lane & Elderson
Earnings from Richemont & Charles Schwab
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team