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Markets Update: Equity Markets Mostly Lower, DXY Holds 102+ Status.
Economic Calendar
Global Markets Roundup: 03 Jan 2023
Asia Pacific stocks were mostly lower on Wednesday, extending losses from Wall Street's downbeat performance. The Shanghai Composite fell 0.6%, while the Hang Seng index shed 1.3%. The Nikkei 225 was closed for a market holiday. The US dollar (DXY) held a softer bias overnight but maintained 102+ status after taking a breather from yesterday's surge from a 101.33 low to a 102.25 peak. The euro (EUR) strengthened against the dollar, rising back above 1.0950. The yen (USD/JPY) traded on either side of 142.00.
Key Developments
China to Persist with Interest Rate Cuts in 2024: According to the China Securities Journal, China is expected to continue lowering interest rates and the reserve requirement ratio (RRR) throughout the year. The move is aimed at supporting economic growth in the face of slowing demand and rising inflation.
Equities Suffer as Wall Street's Downbeat Performance Reverberates: Asian equities were mostly lower on Wednesday, reflecting the downbeat performance of US stocks on Tuesday. The Dow Jones Industrial Average fell 0.6%, while the S&P 500 and Nasdaq Composite indexes lost 0.8% and 1.3%, respectively.
Germany Unemployment Rate Expected to Fall: The German unemployment rate is expected to fall to 5.4% in December from 5.5% in November. The data is due out on Wednesday.
US MBAs and ISM Manufacturing PMIs Expected to Show Growth: The US manufacturing sector is expected to continue to expand in January, according to the Institute for Supply Management (ISM). The ISM Manufacturing PMI is expected to rise to 55.5 from 55.1 in December.
US JOLTs Job Openings Expected to Increase: The number of job openings in the US is expected to increase in December from 11.1 million in November. The data is due out on Wednesday.
FOMC Minutes and Fed's Barkin Speech in Focus: The Federal Open Market Committee (FOMC) minutes for December's meeting are due out on Wednesday. Investors will be interested in any new insights into the central bank's thinking on interest rates. Additionally, Federal Reserve Bank of Richmond President Thomas Barkin will deliver a speech on Wednesday.
Supply Chain Disruptions from Germany Expected: Supply chain disruptions in Germany are expected to persist in the near term, according to a report from the Ifo Institute. The report found that shortages of materials and labor are the main challenges facing businesses.
JD Sports and Bellway Earnings in Focus:Â JD Sports and Bellway are among the companies scheduled to report earnings on Wednesday.
The ASX 200 fell 0.65%, with the biggest losses coming from gold miners and technology stocks. The KOSPI fell 0.77%, with semiconductor stocks leading the decline. The Hang Seng rose 0.58%, with mainland Chinese stocks getting a boost from speculation about further stimulus measures from the government. The Shanghai Composite rose 0.25%. US equity futures were slightly lower after trading sideways overnight. The S&P 500 futures fell 0.15% and the Nasdaq 100 futures fell 0.30%.
FX
DXY Holds Softer Bias Overnight: The dollar index (DXY) traded on either side of 102.00 overnight, after taking a breather from its recent surge from a 101.33 low to a 102.25 peak.
EUR Finds Support Near 21 DMA: The euro (EUR) traded on either side of 1.0950 overnight, after finding support near its 21 DMA (1.0937).
GBP Steady: The British pound (GBP) held onto 1.2600+ status overnight, following yesterday's tumble from levels north of 1.2750.
USD/JPY Trades on Either Side of 142.00: The yen (USD/JPY) saw little action overnight and traded on either side of 142.00, while Japanese participants were away due to a market holiday.
AUD and NZD Initially Benefited But Then Headed to Session Lows: The Australian dollar (AUD) and New Zealand dollar (NZD) initially benefitted as the dollar eased off highs, but then headed to session lows ahead of the Chinese cash equity open.
PBoC Sets USD/CNY Mid-Point at 7.1002: The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.1002, versus expectations of 7.1512 (previous 7.0770).
COMMODITIES
Crude Futures Consolidate: Crude oil futures consolidated following their prior session's hefty losses, holding a downward bias through APAC hours amid the soured risk tone in the region.
Spot Gold Gains: Spot gold drifted marginally higher, seeing some relief as the dollar index (DXY) eased off its best levels.
Copper Futures Fail to Benefit: Copper futures failed to benefit from the improved risk sentiment, as the market remained concerned about the overall economic outlook.
Iron Ore Rises Following Headlines on Potential Chinese Stimulus: Iron ore rose, boosted by headlines regarding further potential Chinese stimulus measures.
Libya's Sharara Oilfield Output Curbed: Protests at Libya's Sharara oilfield have forced a partial shutdown of production, which could put upward pressure on oil prices.
Looking Ahead
Investors will be looking to the release of China's Caixin Manufacturing PMI and the US retail sales data for December for further direction. The Caixin Manufacturing PMI is expected to show a slight improvement from November's reading of 51.1. The US retail sales data is expected to show a strong increase, which could boost investor confidence and support risk appetite.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team