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Markets Update: Mixed APAC Markets Navigate Earnings Reports.
Economic Calendar
Global Markets Roundup: 25 Oct 2023
APAC stocks presented a mixed picture today, taking cues from a stronger performance on Wall Street. Investor attention was notably focused on earnings releases from tech giants Microsoft and Alphabet.
- **Microsoft and Alphabet Earnings Impact Market Sentiment:**
Microsoft shares registered a notable 3.9% gain, contrasting with Alphabet, which experienced a 5.9% decline. The market's spotlight was on cloud growth, with Microsoft's guidance influencing a slight dip in ES and NQ futures.
- **ASX 200 Slips Amid Australian CPI Data:**
The ASX 200 experienced a slip, and the Australian Dollar (AUD/USD) saw an uptick following the release of hotter-than-expected Australian Consumer Price Index (CPI) data. The robust CPI figures led to hawkish revisions in some analysts' Reserve Bank of Australia (RBA) predictions.
- **Geopolitical Tensions Escalate:**
Geopolitical tensions intensified as Israeli occupation forces entered a West Bank town, and Israel reported two projectiles launched from Syria. In a separate development, Hezbollah claimed to have struck an Israeli post with guided missiles.
**European Markets Indicate Slightly Firmer Open:**
- **European Equity Futures Point to Modest Gains:**
European equity futures are signaling a slightly firmer open, with the Euro Stoxx 50 showing a 0.1% increase after cash markets closed up 0.6% in the previous session.
**ASX 200 Dips on Robust Aussie CPI: Real Estate Sector Bears Brunt**
The ASX 200 experienced a dip into negative territory following a robust Australian Consumer Price Index (CPI) report that surpassed expectations across various metrics. This unexpected strength prompted hawkish reassessments from some analysts regarding Reserve Bank of Australia (RBA) policy predictions. The Real Estate sector led sectoral losses, offset by a commendable performance from the Mining sector.
- **Real Estate Sector Faces Headwinds:**
Sectoral losses were chiefly led by Real Estate, reflecting the broader market's response to the strong CPI figures. Despite the sectoral downturn, the ASX 200 found support in the commendable performance of the Mining sector, which helped mitigate overall losses.
- **Nikkei 225 Benefits from JPY Weakening:**
The Nikkei 225 saw support from recent Japanese Yen (JPY) weakening, favoring export-related sectors. Notably, Bloomberg sources hinted at the Bank of Japan's (BoJ) perceived lack of urgency to alter its forward guidance, emphasizing a commitment to potential monetary easing measures.
- **Hang Seng and Shanghai Comp Surge on Positive Sentiment:**
The Hang Seng and Shanghai Composite indices surged at the opening bell, buoyed by positive sentiment in the region. Reports indicating an unprecedented visit by Chinese President Xi Jinping to the People's Bank of China (PBoC) underscored a concentrated focus on economic matters. Hong Kong markets outperformed, with large-cap gains ranging between 4-6%, and the tech sector received tailwinds from positive signals emanating from Microsoft's recent earnings and guidance.
**FX Markets Navigate Tight Ranges Amid Limited Catalysts**
In the foreign exchange markets, the Dollar Index (DXY) maintained a confined range between 106.18 and 106.27 during a session characterized by light newsflow. The index, which reached highs of 106.35 in the prior session and 106.32 on Monday, demonstrated stability.
- **Major Pairs Display Limited Movement:**
- **USD/JPY and GBP/USD:** Both pairs exhibited uneventful trading within narrow parameters.
- **EUR/USD:** Despite encountering resistance at 1.0600 initially, the Euro eventually edged above this level. Market participants are now turning their attention to the German Ifo Survey, particularly after the previous day's somber Purchasing Managers' Index (PMI) figures.
- **AUD and NZD Outperform on Strong Australian CPI:**
- **AUD/USD:** The Australian Dollar was a standout performer after Consumer Price Index (CPI) data exceeded expectations across the board. ANZ Bank economists revised their projections for Reserve Bank of Australia (RBA) rates, now anticipating a 25 basis points hike to 4.35% in November. AUD/USD faced resistance at 0.6400.
- **NZD/USD:** The New Zealand Dollar followed the upward trajectory in tandem with the Aussie. However, gains were capped as the AUD/NZD cross rose above 1.0900.
**Fixed Income Markets Exhibit Stability Amid Data Dynamics**
- **10-year UST Futures:** Displayed a flat performance following choppy trade, with hot US survey data offsetting weaker European figures and slightly softer 2-year auction demand.
- **Bund Futures:** Encountered overnight resistance just below 129.00 after navigating a 128.22-129.12 range the previous day. Focus shifted to the German Ifo Survey in anticipation of the upcoming ECB conference.
- **10-year JGB Futures:** Demonstrated subdued activity despite a firmer bias in Western peers. The market is abuzz with speculation about a possible Bank of Japan (BoJ) Yield Curve Control (YCC) tweak at the forthcoming meeting amid the rise in US yields.
**Commodity Markets Witness Consolidation and Modest Upside**
- **Crude Futures:** Consolidated during APAC hours after a tumble on the prior day. The softer Purchasing Managers' Index (PMI) figures in Europe, a Dollar rebound, and evolving sentiments regarding the Middle East contributed to the nuanced movement. A surprise draw in private inventories led to modest upside volatility.
- **Spot Gold:** Registered slight gains, finding support at USD 1,970/oz, yet remaining within the boundaries of the preceding day's trading range.
- **Copper Futures:** Experienced modest gains as part of a broader positive sentiment across industrial metals. Hopes for increased Chinese demand were stoked by reports indicating China's plan to issue CNY 1 trillion in bonds to bolster the economy. Dalian iron ore January futures surged about 4% in early trade.
**US Energy Inventory Data and China's Crude Processing Capacity Plans**
- **US Energy Inventory Data:** Indicated a surprise draw in crude oil inventories, contributing to modest upside volatility in prices. Gasoline and distillate inventories also saw unexpected contractions.
- **Iraqi PM on Oil Production:** Prime Minister Sudani of Iraq stated that foreign oil companies operating in the Kurdish region might resume oil production within a month if agreements on production costs and contracts are reached.
- **China's Crude Oil Processing Plans:** China's state planner announced plans to cap crude oil processing capacity at 1 billion metric tons by 2025. Refineries with a capacity of 10 million metric tons are expected to account for 55% of the total. The objective is to promote the upgrading and optimization of refineries, with an emphasis on eliminating small and outdated plants.
**Key Events and Earnings on the Horizon:**
- **Economic Data Releases and Central Bank Announcements:**
Looking ahead, the economic calendar includes the release of German Ifo data and US New Home Sales. The Bank of Canada (BoC) is set to make a policy announcement, and speeches from ECB's Lagarde and BoC's Macklem & Rogers are anticipated.
- **Earnings Reports from Diverse Sectors:**
Notable earnings reports are expected from various sectors, including ADP, Heineken, Santander, Ubisoft, and Reckitt Benckiser. Tech giants Meta, Thermo Fisher, T-Mobile, IBM, ADP, and Boeing are also among the companies set to announce their earnings.
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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