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Markets Update: APAC Stocks Retreat as Inflation and Earnings Jitters Linger, European Futures Slide.
Economic Calendar
Global Markets Roundup: 10 Jan 2023
Asian equities faced the brunt of selling pressure on Wednesday, mirroring a lackluster handover from Wall Street and heightened anxiety ahead of key inflation data and earnings releases. The tentative mood spilled over to European markets, with futures for the Euro Stoxx 50 down 0.3% despite Tuesday's 0.4% gain in the cash market. Meanwhile, the US Dollar held its ground above 102.50 against a basket of major currencies, while USD/JPY edged closer to 145 as weak Japanese wage data fueled speculation about further monetary easing.
Australian monthly CPI data surprised on the downside, coming in softer than expected but still comfortably above the 2%-3% inflation target. This adds to the growing anxiety regarding global price pressures, with major central banks expected to unveil their latest policy decisions in the coming weeks. Adding to the market unease was a brief bout of volatility in Bitcoin. The cryptocurrency swung wildly after an unauthorized post on the official US Securities and Exchange Commission (SEC) account on social media falsely claimed the approval of spot Bitcoin ETFs. The incident highlighted the regulatory uncertainty surrounding digital assets and further spooked risk appetite.
The ASX 200 tumbled today, pulled down by mining, materials and resources stocks. This drop came despite monthly CPI data coming in softer than expected, though still significantly above the target range of 2-3%. In contrast, Japan's Nikkei 225 enjoyed a historic jump, breaching the 34,000 mark for the first time in over 30 years. This rally was fueled by weak wage data, which strengthened the case for the Bank of Japan to maintain its dovish monetary policy stance, boosting investor sentiment. Both the Hang Seng and Shanghai Composite indices traded sideways, lacking any major catalysts for either gains or losses. A tepid liquidity operation by the People's Bank of China added to the muted mood. Meanwhile, analysts at HSBC and Citigroup downgraded their Hang Seng targets, citing concerns about earnings and China's future policy direction.
FX
DXY Stalemate: The US Dollar Index (DXY) shuffled aimlessly in a narrow range, lacking catalysts for a decisive direction. Participants held their breath before tomorrow's inflation readout.
EUR/USD Holds Ground: EUR/USD traded uneventful near the 1.0900 level, despite recent dovish comments from European Central Bank officials. The pair seemed unwilling to commit to a direction pre-CPI.
GBP/USD Retreats: GBP/USD dipped back towards 1.2700 in the absence of fresh news, with BoE Governor Andrew Bailey's upcoming speech offering a potential spark later.
USD/JPY Surges: USD/JPY extended its gains above 144.50, buoyed by a rally in Japanese equities and soft Japanese wage data. The weak wage figures reinforced expectations of continued monetary policy divergence between the Fed and the Bank of Japan.
AUD and NZD held steady against the USD but remained contained by the broadly cautious risk sentiment. AUD faced additional pressure after softer-than-expected monthly CPI data from Australia.
PBoC Weakens Yuan: The People's Bank of China (PBoC) set the USD/CNY midpoint slightly weaker at 7.1055, reflecting their ongoing efforts to manage the RMB's depreciation.
COMMODITIES
Oil steadies after data: Crude futures edged higher, clawing back some of their earlier losses but stalling after US Energy Information Administration (EIA) data showed a surprise drop in crude stocks but larger-than-expected increases in gasoline and distillate inventories. The EIA also revised its 2024 world oil demand growth forecast upwards, predicting a 1.39 million BPD rise, slightly boosting sentiment. Algeria seeks US investment: Algeria's Energy Minister held talks with ExxonMobil, potentially signaling interest in securing investments for the country's oil and gas sector.
Gold awaits inflation clues: Spot gold remained subdued, hovering around $1,840/oz amid a steady dollar and a lack of major catalysts before Thursday's crucial US Consumer Price Index (CPI) data. The CPI print is expected to influence the Federal Reserve's monetary policy decisions and could therefore significantly impact gold prices.
Copper rallies from bottom: Copper futures rebounded slightly after finding support around $3.76/lb. The metal had come under pressure in the previous session due to global economic concerns, but the modest reprieve suggests some stabilization in the market.
Looking ahead, investors will be glued to several key economic releases throughout the day, including Norwegian CPI, US MBA Mortgage Applications, Wholesale Sales, and Chinese M2 Money Supply. Central bank speeches from BoE's Bailey & Breeden, ECB's de Guindos & Schnabel, and Fed's Williams will also be closely watched for any fresh insights into monetary policy intentions.
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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