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Markets Update: APAC Stocks Trade Lower as US Yields and Data Dampen Sentiment
Economic Calendar
Global Markets Roundup: 02 August 2023
Asian stocks traded lower on Wednesday, following the mostly negative lead from Wall Street, where sentiment was dampened by higher yields and weak data.
Fitch Ratings cut the US sovereign rating from AAA to AA+, with the outlook revised to Stable from Watch Negative. The move was largely expected, but it nonetheless added to the negative sentiment in the market.
European equity futures were also pointing to a lower open, with the Euro Stoxx 50 down 0.7%. The dollar was firmer, while the yen led the majors, with the euro trading just below the 1.10 mark. Crude futures extended gains, supported by the private sector inventory data, which showed a record weekly drawdown of crude inventories.
The Australian ASX 200 fell 0.6%, led by weakness in the utilities, real estate, and financial sectors. The Nikkei 225 in Japan lost 0.7%, while the Hang Seng index in Hong Kong was down 0.8%. The sell-off in Asian markets came after a sharp decline in US stocks on Monday, as investors worried about the impact of rising interest rates and inflation on economic growth.
Forex
The US dollar (USD) remained firm on Wednesday, supported by 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 Bank of England's (BoE) interest rate decision on Thursday.
The Japanese yen (JPY) was kept afloat against the USD, as it benefited from the widening yield differential between the two currencies. The BoJ's Deputy Governor, Masayoshi Uchida, reiterated the central bank's dovish stance, which also supported the JPY.
The Australian dollar (AUD) and New Zealand dollar (NZD) were both pressured against the USD, as they were weighed down by risk-off sentiment and weak economic data from New Zealand.
PBoC
The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.1368, slightly below market expectations of 7.1664. The PBoC's move is likely an attempt to prevent the USD/CNY from strengthening too much.
The US 10-year Treasury yield rose to 4.05% on Monday, its highest level since May 2011. The yield on the 30-year Treasury bond also rose to 4.30%, its highest level since April 2011.
The rise in yields weighed on risk assets, such as stocks and commodities. Crude oil prices fell 2.3% to $103.40 a barrel, while gold prices fell 0.4% to $1,707 an ounce.
EU and US Unlikely to Reach Steel and Aluminium Deal This Year
The European Union and the United States are not likely to reach a binding agreement on steel and aluminium tariffs this year, according to sources cited by Bloomberg. The sides will likely have to decide whether to impose tariffs on exports or extend the October deadline.
The two sides have been negotiating a deal since last year, but they have been unable to reach an agreement on a number of key issues, including the level of tariffs and the duration of the agreement.
The failure to reach a deal would be a setback for both sides, as it would lead to higher prices for consumers and businesses. It would also be a sign of the growing tensions between the two countries.
Looking Ahead Key economic data releases on Tuesday include US ADP National Employment, Supply from Germany, and US Quarterly Refunding Announcement. Earnings from Hugo Boss, Telecom Italia, BAE Systems, Smurfit Kappa, Taylor Wimpey, Simon Property Group, Occidental Petroleum Corp, Exelon Corp, CVS Health Corp, Qualcomm, and MetLife are also due.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team