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Markets Update: APAC Stocks Retreat as Yields Rebound, RBA Holds Rates, Caixin Services PMI Beats Expectations.
Economic Calendar
Global Markets Roundup: 05 Dec 2023
Asia-Pacific stocks declined on Tuesday, tracking mostly negative sentiment from Wall Street, where major indices were choppy and ultimately weighed down by a rebound in yields ahead of key data releases. The Reserve Bank of Australia (RBA) kept its Cash Rate Target unchanged at 4.35%, as expected, while maintaining its forward guidance. China's Caixin Services PMI for November topped forecasts, reaching 55.6, indicating continued expansion in the services sector. Tokyo CPI for November printed below expectations, rising 3.2% year-over-year, compared to the 3.5% expected. Chinese major state-owned banks were reportedly acquiring dollars via onshore swaps and selling them in the spot FX market. Additionally, it was reported that the RBI was likely selling dollars near the 83.38-83.39 rupee level.
The Australian ASX 200 index was dragged lower on Tuesday by the commodity-related industries, with gold miners underperforming after the precious metal faded from its recent surge. Weak data and the unsurprising RBA rate decision, in which the central bank kept rates unchanged and reiterated its forward guidance, also dampened sentiment. The Japanese Nikkei 225 index continued to weaken, slipping below the 33,000 level despite softer-than-expected Tokyo inflation data. The Hong Kong Hang Seng and Shanghai Composite indexes retreated, with the Shanghai Comp breaching the psychological 3,000 level to the downside. Lingering frictions following China's criticism of the US for perceiving it as a threat, spurred by Commerce Secretary Raimondo's call for more funds to back chip curbs, weighed on sentiment. Encouraging Caixin Services PMI data, which printed a 3-month high at 51.5 (exp. 50.7), provided only a brief tailwind. European equity futures are indicative of a modestly firmer open, with the Euro Stoxx 50 index future up 0.1%, after the cash market closed down 0.1% yesterday.
FX
The US Dollar Index (DXY) traded uneventfully within a narrow range, reflecting the subdued market mood. The prior day's advances, driven by a rebound in yields, were tempered by caution ahead of key data releases.
EUR/USD remained lackluster but held above the 1.0800 level, finding support despite the risk-off sentiment. Market participants awaited Services PMI data from the UK.
GBP/USD traded sideways in the absence of significant macro drivers from the UK.
USD/JPY was restricted by the risk-off mood, but the downside was limited by support around the 147.00 level. Softer-than-expected Tokyo inflation data, considered a leading indicator of the national trend, provided some support to the yen.
AUD and NZD weakened due to the broad risk-off sentiment. AUD/USD faced additional pressure following the RBA's policy announcement, where the central bank kept rates unchanged at 4.35%, as expected, and refrained from any hawkish surprises.
China's major state-owned banks were seen acquiring dollars via onshore swaps and selling them in the spot FX market. Additionally, sources and traders cited by Reuters reported that the RBI was likely selling dollars near the 83.38-83.39 rupee level.
FIXED INCOME
10-year UST futures rebounded from the prior day's bear-flattening, with markets consolidating after the recent Fed rate cut bets.
Bund futures traded steadily near 133.50 ahead of German supply, with prices supported by the downbeat risk appetite.
10-year JGB futures lacked firm direction despite softer Tokyo inflation and mixed results from the latest 10-year JGB auction.
COMMODITIES
Crude oil futures traded sideways, extending the previous day's choppy performance. The ongoing fallout from the OPEC+ meeting, cooling economic data in the US, and volatile Middle East tensions weighed on sentiment.
Saudi Arabia's Energy Minister reiterated that OPEC+ cuts can extend beyond Q1 and that the group will not agree to a fossil fuel phase-down. He added that cuts will address the inventory build in Q1 and that OPEC+ will deliver the agreed-upon 2.2mln BPD cuts.
Spot gold attempts to stabilize after fully reversing this week's initial spike, with prices below USD 2040/oz.
Copper futures languished at the prior day's lows around USD 3.83/lb amid the broad downbeat risk tone.
Looking ahead, key highlights include the release of EZ, UK, US Composite and Services Final PMIs, Spanish and French Industrial Output, US JOLTS data, the Australian AIG Manufacturing Index, the ECB Consumer Expectations Survey, and supply metrics from the UK and Germany.
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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