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Markets Update: APAC stocks lower, Evergrande shares slump, US-China meeting; ASX 200 pressured on tech and telecoms weakness, RBA handover uneventful
Economic Calendar
Global Markets Roundup: 18 Sep 2023
Asian stocks were mostly lower on Monday, following last Friday's declines on Wall Street. The region was cautious in holiday-thinned trade. Evergrande shares slumped by more than 20% after some of its wealth management employees were detained by Chinese authorities.
European equity futures were indicative of a softer open, with the Euro Stoxx 50 future down 0.1%. The cash market closed up 0.4% on Friday. The US dollar index (DXY) and the euro (EUR/USD) were contained on the 105 and 1.06 handles, respectively. The Australian dollar (AUD) and New Zealand dollar (NZD) marginally outperformed. US National Security Adviser Sullivan and Chinese Foreign Minister Wang Yi met in Malta over the weekend in a pre-unannounced meeting.
The ASX 200 was pressured on Monday, with tech and telecoms stocks underperforming. The handover of leadership at the Reserve Bank of Australia was met with little fanfare. The Nikkei 225 was closed for the Respect for the Aged Day holiday. The Hang Seng and Shanghai Composite retreated at the open, with tech and property stocks leading the declines in Hong Kong.
Evergrande shares slumped by more than 20% in early trade after some of its wealth management employees were detained by Chinese authorities. However, the losses in the mainland were later reversed in the aftermath of the People's Bank of China's (PBoC) firm liquidity efforts and the previously unannounced meeting between Chinese Foreign Minister Wang Yi and US National Security Adviser Sullivan.
FX markets rangebound ahead of central bank meetings
The US dollar index (DXY) was rangebound on Monday, as investors awaited a plethora of central bank updates, including the FOMC rate decision on Wednesday. Money markets are currently pricing a 99% chance that the Fed will keep the Fed Funds Rate unchanged. The market will also be paying close attention to the language and the latest dot plots.
The euro (EUR/USD) lacked firm direction following several comments from ECB officials over the weekend. Holzmann said that the ECB cannot say that last week's rate increase was the final hike, and that the likelihood of another hike is not that big, but also noted that inflation risks have not receded lately.
The pound (GBP/USD) was kept afloat, but price action was contained by resistance around the 1.2400 level. The latest UK CPI and the BoE rate decision are due later in the week.
The US dollar against the Japanese yen (USD/JPY) slightly softened amid the Japanese holiday, but retained a firm grip on the 147.00 handle.
The AUD and NZD were marginally higher after a rebound from Friday's lows, in the absence of any pertinent drivers.
The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.1736, slightly weaker than the previous day's fix of 7.1786.
Czech Central Bank hawkish
Czech Central Bank Governor Michl said that there will be no rate cuts in September and October, and that they expect higher rates in the longer term. He also said that core inflation does not allow a rate cut now, and that they will wait for data in November and January.
Bond markets subdued
10-year US Treasury (UST) futures were subdued and extended on Friday's losses ahead of the FOMC meeting mid-week. Cash treasuries were closed during Asia hours owing to the holiday closure in Japan.
Bund futures retreated closer towards the 130.00 level to the downside, despite the somewhat mixed ECB commentary from over the weekend.
Commodities mixed Crude oil futures were kept afloat with WTI crude futures above USD 90/bbl amid ongoing supply-side concerns, but advances were capped after Friday's whipsawing and with risk appetite constrained ahead of this week's risk events. Australia's Offshore Alliance union said members began another 24-hour stoppage on Sunday at Chevron's Australian LNG facilities. French Prime Minister Borne said the government plans to permit gas stations to sell fuel at a loss for a limited period of a few months to help contain inflation. Spot gold eked mild gains and revisited Friday's peak, but upside was capped by a steady dollar. Copper futures were lacklustre amid the cautious risk appetite and indecisive mood in China.
Key events ahead
US NAHB Housing Market Index
Bundesbank Monthly Report
Remarks from Saudi Arabia's Energy Minister
ECB de Guindos & Panetta
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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