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Markets Update: Asia equities mixed; CN Caixin Services PMI beats ests, but passenger car sales -5% y/y; JP JGBs continue rising and BOJ responds with unscheduled JGB purchases; UK BOE rate decision today;
Economic Calendar
Global Markets Roundup: 03 Aug 2023
Asian stocks mostly followed suit to the weakness in global peers on Thursday, albeit with some of the losses stemmed in Asia as participants digested Chinese Caixin PMI figures.
The Caixin Manufacturing Purchasing Managers' Index (PMI) for July came in at 51.7, slightly below the consensus forecast of 51.8 and down from 51.9 in June. The Caixin Services PMI also came in at 53.3, below the consensus forecast of 54.0 and down from 54.5 in June.
The weakness in the Chinese PMIs weighed on Chinese stocks, with the Shanghai Composite Index closing down 0.6%. However, other Asian markets were able to recoup some of their losses, with the Nikkei 225 in Japan closing up 0.1% and the Hang Seng index in Hong Kong closing flat.
European Equity Futures Point to Marginally Softer Open
European equity futures are pointing to a marginally softer open on Thursday, with the Euro Stoxx 50 futures down 0.1%. The weakness in European stock futures is likely due to the continued weakness in global markets and the upcoming Bank of England (BoE) interest rate decision. The BoE is expected to raise interest rates by 25 basis points on Thursday, but there is some uncertainty about whether the BoE will raise rates by more than 25 basis points.
DXY Remains on the Front Foot
The US dollar (USD) remained on the front foot on Thursday, as it benefited from risk-off sentiment and rising US yields. The 10-year Treasury yield climbed back above 4%, while the 30-year yield printed fresh YTD highs.
The euro (EUR) was subdued against the USD, as it failed to sustain the 1.1000 level. The pound (GBP) also remained lacklustre, as investors awaited the BoE's interest rate decision on Thursday.
Brazil Central Bank Cuts Selic Rate by 50bps The Brazilian Central Bank (BCB) cut the Selic rate by 50 basis points to 13.25% on Thursday. This was larger than the 25 basis point cut that was expected by economists. The decision was not unanimous, with two members of the BCB's Monetary Policy Committee voting to keep the Selic rate unchanged. The BCB's decision to cut the Selic rate is a sign that the central bank is concerned about the impact of rising interest rates on economic growth. The BCB is also likely hoping that the cut in the Selic rate will help to boost inflation, which has been running below the central bank's target of 4.25%.
The ASX 200 and Nikkei 225 leading the declines. The Hang Seng index and Shanghai Composite index were slightly higher, but they were still trading below their respective 200-day moving averages. The weakness in Asian stocks was due to a combination of factors, including:
The sell-off in US stocks on Monday
Rising bond yields
Concerns about the global economic outlook
FX The US dollar (USD) remained strong against most major currencies on Thursday. The USD/JPY rose to a 20-year high, while the EUR/USD fell below 1.10. The strength of the USD was due to a number of factors, including:
The rise in US yields
The risk-off sentiment in the markets
The expectation that the Federal Reserve will continue to raise interest rates
Fixed Income US Treasury yields were higher on Thursday, with the 10-year yield rising above 3.0%. The rise in yields was due to a number of factors, including:
The sell-off in stocks
The expectation that the Federal Reserve will continue to raise interest rates
Commodities Commodity prices were mixed on Thursday. Oil prices were lower, while gold prices were higher. The decline in oil prices was due to the strength of the USD and the risk-off sentiment in the markets. The rise in gold prices was due to the safe-haven demand for the precious metal.
Looking Ahead There are a number of key economic data releases and central bank events scheduled for the rest of the week. These include:
German trade data for June
Eurozone and UK services PMIs (final)
Swiss CPI for July
US IJC, Factory Orders, and ISM Services for July
BoE policy announcement
BoE's Bailey
ECB's Panetta
Fed's Barkin, Bostic, and Goolsbee
Supply from Spain and France
There are also a number of earnings reports scheduled for the rest of the week. These include:
Adidas
AXA
BMW
Infineon
ING
Lufthansa
Merck
Rolls-Royce
ConocoPhillips
Regeneron Pharmaceuticals
Apple
Kellogg Co
Moderna
Amazon.com
Warner Bros Discovery
Airbnb
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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