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Markets Update: APAC Stocks Decline, European Futures Point to Lower Open; ASX 200 Dragged Lower by Tech, Financials; Nikkei 225 Extends Losses Amid FX Intervention Speculation; KOSPI Underperforms on Return from Holiday;Hang Seng Conforms to Downbeat Mood.
Economic Calendar
Global Markets Roundup: 04 Oct 2023
APAC stocks declined on Wednesday, following losses on Wall Street where stocks and bonds resumed their slide. European equity futures are indicative of a lower open, with the Euro Stoxx 50 future down 0.2% after the cash market closed down 1.0% yesterday.
The US dollar index (DXY) lingers above 107, while USD/JPY sits on a 149 handle after yesterday's suspected intervention. Japanese Finance Minister Suzuki responded "no comment" when asked if Japan intervened. The Reserve Bank of New Zealand (RBNZ) kept rates unchanged at 5.50% and refrained from any hawkish surprises.
The ASX 200 was dragged lower on Wednesday by underperformance in tech, real estate, and the top-weighted financial sector amid headwinds amid the continued upside in yields. The Nikkei 225 extended its losses on Wednesday, falling beneath the 31,000 level amid wide speculation of FX intervention. Japanese officials have refused to confirm or deny whether they intervened.
The KOSPI underperformed on its return from an extended holiday on Wednesday, despite encouraging industrial production data which showed a surprise expansion. The Hang Seng conformed to the downbeat mood on Wednesday, falling amid the continued absence of mainland participants and with pressure on tech, energy, and casino stocks.
FX
The US dollar index (DXY) was rangebound on Wednesday after the prior day's fluctuations, with the initial upward momentum offset amid suspected Japanese FX intervention. The dollar largely ignored the latest Fed rhetoric and a historic showdown in the House where McCarthy became the first-ever Speaker to be ousted.
The euro (EUR) was lacklustre, with the single currency stuck near year-to-date lows beneath the 1.0500 handle.
The British pound (GBP) was uninspired after the prior day's failed attempt to reclaim the 1.2100 level.
The Japanese yen (JPY) was back at the 149.00 handle after having retraced most of the recent intervention-speculated slump as several officials stuck to the familiar jawboning and remained tight-lipped on whether they intervened.
The antipodeans were mixed, with AUD/USD flat for most of the session before picking up ahead of the European entrance, while NZD/USD was pressured in reaction to the RBNZ rate decision, where the central bank kept rates unchanged at 5.50% and refrained from any hawkish surprises.
Japanese top currency diplomat Kanda reiterated "no comment" on FX intervention and wouldn't comment on whether he discussed a weak yen with PM Kishida. He also said it is normal for authorities not to comment on whether they intervened or not. Japanese Finance Minister Suzuki said currency rates should be set by the market and rapid FX moves are undesirable.
Suzuki added that FX stability is important and won't rule out any options against excessive moves, while he responded "no comment" when asked if Japan intervened.
Japanese Chief Cabinet Secretary Matsuno said "no comment" on whether Japan intervened in the FX market and said it is important for currencies to move stably reflecting fundamentals. Matsuno also reiterated that they will continue to take appropriate steps on FX.
FIXED INCOME
10-year US Treasury futures extended their declines on Wednesday as yields continued to edge higher after strong JOLTS data stoked tightening labour market concerns and further underscored the higher-for-longer narrative.
Bund futures remained on the back foot and trickled beneath the 127.00 level.
10-year JGB futures were pressured amid spillover selling from peers and with mild gains in Japan's 10-year yield. 10-year JGB swaps reached the 1.0% level to match the BoJ's upper implementation limit.
COMMODITIES Crude futures were little changed on Wednesday, with WTI beneath USD 90/bbl as demand was hampered by the risk-off mood and mixed private sector inventory data. Attention turns to the OPEC JMMC meeting. US Energy Inventory Data (bbls): Crude -4.2mln (exp. -0.5mln), Gasoline +3.9mln (exp. +0.2mln), Distillate +0.3mln (exp. -0.3mln), Cushing +0.7mln Kuwait's KIPIC said a third refinery in the Al Zour oil compound is to start operations this month. Spot gold struggled for direction on Wednesday as the greenback remained afloat. Copper futures retreated amid the broad weakness across Asian bourses.
Key economic data and events to watch on Wednesday include:
EZ, UK, and US services and composite PMIs
EZ producer prices and retail sales
US MBA, ADP, ISM, and durable goods data
NBP policy announcement
OPEC+ JMMC meeting
Speeches from ECB's Lagarde, de Guindos, and Panetta, and Fed's Schmid, Bowman, and Goolsbee
Supply from 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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