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Markets Update: APAC Stocks Mixed as Investors Digest Earnings and Inflation Data form China
Economic Calendar
Global Markets Roundup: 09 August 2023
Asian stocks traded mixed on Wednesday as participants digested a deluge of earnings releases and the latest inflation data from China. The Shanghai Composite rose by 0.1%, while the Hang Seng Index was up 0.5%. The Nikkei 225 was down 0.2%. The Chinese government reported that consumer prices fell by 0.2% in June from a year earlier, the first time inflation has been in deflationary territory since 2016. However, producer prices rose by 6.1% in June from a year earlier, the highest level in 13 months. The mixed inflation data did little to change the overall cautious mood in the markets, as investors continued to worry about the impact of rising interest rates and the potential for a recession. European equity futures were indicative of a firmer open, with the Euro Stoxx 50 up 0.9% after the cash market closed down by 1.1% on Wednesday. The dollar index (DXY) was a touch softer, while the euro (EUR) remained below 1.10. USD/JPY sat on a 143 handle, while the Australian dollar (AUD) marginally outperformed.
The Australian market was just about kept afloat by the outperformance in its top-weighted financial sector after Australia's largest lender CBA posted a record FY profit. The Nikkei 225 ultimately weakened with trade initially indecisive amid an influx of earnings releases and with the biggest winners and losers all driven by corporate results including SoftBank which was near the bottom end of the spectrum after its surprise loss.
The Hang Seng and Shanghai Composite were subdued as markets reflected on the mixed inflation data from China which showed CPI Y/Y slipped into deflation territory, albeit at a narrower-than-expected drop in prices, while factory gate prices continued to fall at a steeper than forecast pace.
US equity futures were steady and largely ignored the latest soft metrics from China. European equity futures were indicative of a firmer open with the Euro Stoxx 50 +0.9% after the cash market closed down by 1.1% on Thursday.
FX
DXY took a breather after benefitting yesterday from the risk-off conditions and was unfazed by comments from Fed's Harker who suggested the potential for the Fed to begin cutting rates next year. EUR/USD attempted to nurse some of its recent losses although remained firmly below the 1.1000 handle in the absence of any pertinent catalysts to fuel the rebound. GBP/USD lacked direction after recovering from yesterday’s brief slip beneath the 1.2700 level. USD/JPY was uneventful after the recent dollar strength provided a firmer footing above 143.00. AUD/USD underpinned as CNH strengthened in the aftermath of a firmer-than-expected reference rate setting and with Chinese major state-owned banks purchasing the yuan. PBoC set USD/CNY mid-point at 7.1588 vs exp. 7.2198 (prev. 7.1565) China's major state-owned banks were seen selling dollars to buy yuan in the onshore spot FX market.
Fixed Income
10-year US Treasury futures were uneventful but held on to most of their recent gains, as the subdued risk tone and strong demand for global supply offset the bull flattening in the US. Bund futures plateaued overnight after yesterday's strong rally to above the 133.00 level. 10-year JGB futures tracked the gains in global counterparts, with the Bank of Japan (BoJ) in the market for nearly JPY 1.8 trillion of JGBs on top of its fixed-rate operations.
Commodities
Crude futures traded rangebound after recent swings and mixed private sector inventory data. The US Energy Information Administration (EIA) reported that crude oil inventories rose by 4.1 million barrels last week, while gasoline inventories fell by 0.4 million barrels and distillate inventories fell by 2.1 million barrels. The EIA also released its Short-Term Energy Outlook (STEO), which showed that world oil demand growth is expected to remain unchanged in 2023 at 1.76 million barrels per day (BPD), but is expected to slow to 1.61 million BPD in 2024.
Spot gold found some reprieve as the dollar took a breather from its recent advances. Copper futures were in recovery mode despite further soft economic releases from China. Peru's copper production rose 21.8% in June year-over-year, according to the nation's energy ministry.
Looking ahead, highlights include EIA Weekly Energy Inventories, Supply from UK, Germany & US, Earnings from Continental, E.ON, Bellway, Flutter & Walt Disney.
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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