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Markets Update: APAC Stocks Fall on Rising Yields, RBA Keeps Rates Steady; Asian currencies under pressure against the USD;
Economic Calendar
Global Markets Roundup: 03 Oct 2023
APAC stocks declined on Tuesday amid the rising global yield environment and the continued absence of some key markets, such as mainland China and Hong Kong, which are on holiday.
The Reserve Bank of Australia (RBA) unsurprisingly kept rates steady in Governor Bullock's inaugural meeting, with the statement largely a carbon copy of the previous one under Philip Lowe's tenure.
European equity futures are indicative of a lower open on Tuesday, with the Euro Stoxx 50 future down 0.7% after the cash market closed down 0.9% on Monday. The US dollar index (DXY) is firmer above 107, while the euro (EUR) is subdued beneath 1.05 and the Japanese yen (JPY) continues to eye 150. The Australian dollar (AUD) is lagging.
APAC stocks fell on Tuesday, with the ASX 200 and Hang Seng leading the declines. The ASX 200 was dragged lower by underperformance in the mining-related sectors due to the recent declines in commodity prices and with headwinds from the rising yields. Australia's 10-year yield rose to its highest since 2011. The RBA's decision to keep rates steady provided no major fireworks. The Nikkei 225 weakened with all industries pressured, with energy firms leading the broad declines. The Hang Seng was the worst hit on return from holiday, with losses in property, tech, and energy. Developers suffered despite an early spike in Evergrande shares by around 35% on resumption of trade.
FX The US dollar index (DXY) firmed above 107.00 after yields rose following the shutdown aversion and ISM data. Several Fed speakers, including Mester, stated that the monetary policy path depends on how the economy performs and the Fed will likely need to hike rates one more time this year. The euro (EUR) remained subdued beneath 1.0500 against the stronger dollar. The British pound (GBP) trickled further south of 1.2100 after the latest BRC shop price index pointed to the slowest retail inflation in a year. The Japanese yen (JPY) traded sideways and remained close to 150.00 against the dollar. The antipodeans weakened amid risk aversion and pressure in commodities.
The Reserve Bank of Australia (RBA) unsurprisingly kept rates steady at 4.10% in Governor Bullock's inaugural meeting, with the statement largely a carbon copy of the previous one under Philip Lowe's tenure, reiterating that some further tightening may be required.
Japanese Finance Minister Suzuki said it is important for currencies to move in a stable manner reflecting fundamentals and that they will take appropriate steps on FX moves with a sense of urgency. He added that they will stand ready to respond while closely watching FX moves. He also said that currency interventions are not targeting FX levels and whether to carry out FX intervention is determined by volatility.
FIXED INCOME
10-year US Treasury futures remained around contract lows following the recent bond selling, in which yields climbed to fresh highs last seen in 2007 after ISM data and various Fed commentary.
Bund futures nursed some of their losses, although the recovery lacked meaningful strength.
10-year JGB futures reversed opening losses with prices further supported after the latest 10-year auction showed demand was relatively stable despite the higher accepted prices.
COMMODITIES
Crude futures remained pressured amid headwinds from a firmer dollar and the broad downbeat risk sentiment across Asia, which dragged Brent crude futures back beneath USD 90/bbl.
IEA's Birol said subsidies are a major incentive to increase fossil fuel use and that eliminating them is an absolute must.
Spain's Energy Minister showed support for the Dutch call to phase out fossil fuel subsidies.
Spot gold was marginally pressured as the greenback sustained its recent strength.
Copper futures extended on declines amid the risk-off mood and absence of Chinese buyers.
Key economic data and events to watch on Tuesday include:
US IBD/TIPP & JOLTS
Australian PMI (final)
Fed's Bostic speech
ECB's Lane & Valimaki speeches
Supply from UK
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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