top of page

Monday Morning Coffee-Markets Update-28Aug2023-APAC Stocks Open Higher, ECB and BOJ Policy in Focus

Writer's picture: The Trade  Academy TeamThe Trade Academy Team

Markets Update: APAC Stocks Open Higher, ECB and BOJ Policy in Focus - CN equities rise at open after a flurry of weekend announcements out of CN in bid to rescue domestic markets, stocks later pared gains; China Evergrande relists in HK after 18 months, -80%;

 

Economic Calendar


 

Global Markets Roundup: 28 Aug 2023


Asian stocks opened higher on Monday, following a similar lead from Wall Street, with investors awaiting the outcome of the European Central Bank (ECB) and Bank of Japan (BOJ) policy meetings later this week.

The Nikkei 225 index in Japan rose 0.5%, the Hang Seng index in Hong Kong gained 0.6%, and the Shanghai Composite index in China rose 0.7%. The US dollar index (DXY) was little changed at 104.10, after trading in a tight range on Friday.


The euro was up 0.1% against the dollar at $1.0830, while the Japanese yen was down 0.2% at ¥137.65. ECB President Christine Lagarde said on Friday that the ECB needs to set rates at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to its 2% medium-term target.

BoJ Governor Haruhiko Kuroda said over the weekend that underlying inflation in Japan is still below 2%, which is a reason to stick to the current monetary policy approach.


FX The US dollar index (DXY) was little changed above 104.00 after a choppy session on Friday. G10 currencies were mostly firmer against the dollar, with the Australian dollar (AUD) and New Zealand dollar (NZD) leading the gains. The AUD was supported by a combination of factors, including strong commodity prices, above-forecast Australian retail sales, and a firmer-than-expected yuan fixing by the People's Bank of China (PBoC). The PBoC set the yuan fixing at 7.1856 against the dollar, stronger than the market expectation of 7.2854. The JPY was the worst performer, falling against most major currencies. The weakness in the JPY was attributed to dovish commentary from Bank of Japan (BoJ) Governor Haruhiko Kuroda, who said that underlying inflation is still below 2%, which is a reason to stick to the current monetary policy approach.

FIXED INCOME 10-year US Treasury futures were steady after the treasury curve flattened on Friday in the wake of Fed Chair Jerome Powell's speech. Powell took a more balanced approach in his speech, saying that the Fed is committed to bringing inflation back to its 2% target, but that it will be patient and gradual in its approach. Bund futures found some overnight support around 132.00, but remained within Friday's range of 131.86-132.57. 10-year JGB futures eventually tracked price action in Western counterparts and saw relatively contained price action. Overall, the FX and fixed income markets were relatively quiet on Monday, with investors awaiting further developments on the US-China trade talks and the upcoming monetary policy meetings of the Fed and the ECB.


COMMODITIES

  • Crude oil prices were relatively flat on Monday, as traders weighed the possibility of a US-Iran oil deal against the threat of Tropical Storm Idalia to oil production in the Gulf of Mexico.

  • Spot gold prices traded sideways, supported by the weaker dollar.

  • Base metals prices saw modest gains, supported by positive sentiment from China's recent market support measures.

Tropical Storm Idalia

  • Tropical Storm Idalia is bringing heavy rains to portions of western Cuba and the Yucatan Peninsula. It is expected to become a hurricane over the eastern Gulf of Mexico, according to the NHC.

  • The storm is expected to bring strong winds and heavy rain to the region, and could disrupt oil production in the Gulf of Mexico.

Oil leak in Iran

  • An oil leak has been found in a transmission pipeline linking Kharg Island to Iran's Genaveh port. The magnitude of the spill has not been specified.

Baker Hughes Rig Count

  • The Baker Hughes rig count fell by 8 to 512 this week. The number of active oil rigs fell by 7, while the number of active gas rigs fell by 1.

Key events to watch this week:

  • ECB monetary policy meeting

  • BOJ monetary policy meeting

  • US Dallas Fed Manufacturing Index

  • US crude oil inventories

  • EU and US supply data

 

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team

Post: Blog2_Post
bottom of page