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Markets Update: APAC Stocks Rise on Dovish Fed Rhetoric, China Stimulus Hopes
Economic Calendar
Global Markets Roundup: 11 Oct 2023
APAC stocks were higher on Wednesday, extending the positive momentum from global peers overnight, which was driven by dovish Fed rhetoric and hopes of stimulus from China. Tensions proceed in the Middle East concerning Israel and Palestine.
European equity futures are indicative of a weaker open, with the Euro Stoxx 50 future down 0.6% after the cash market closed up 2.3% on Tuesday. The US dollar index (DXY) languishes beneath 106, while EUR/USD hovers around 1.06 and USD/JPY and Cable sit below 149 and 1.23 respectively.
The ASX 200 was led by outperformance in tech and mining-related industries, while the index was unfazed by comments from RBA's Kent who reiterated some further policy tightening may be required. The Nikkei 225 advanced and briefly breached the 32,000 level to the upside. The Hang Seng and Shanghai Composite conformed to the broad constructive mood amid stimulus hopes with China to boost financial assistance to expand consumption and is weighing new stimulus, as well as a higher budget deficit this year to meet its growth target.
FX The US dollar index (DXY) lacked direction and languished at a sub-106.00 level after the latest bout of Fed rhetoric continued to suggest the recent moves in yields meant there was less for the Fed to do, while the attention for the dollar turns to the FOMC Minutes due later followed by US CPI data on Thursday. EUR/USD was steady and held on to most of yesterday's gains after climbing back above 1.0600. GBP/USD traded marginally higher and tested the 1.2300 level where it met with resistance.
USD/JPY saw two-way trade as headwinds from the narrowing of yield differentials and recent BoJ sources were counterbalanced by haven outflows.
AUD and NZD were lacklustre in the absence of tier-1 data releases and after comments from RBA's Assistant Governor Kent provided little to shift the dial.
The PBoC set the USD/CNY mid-point at 7.1779 vs exp. 7.2842 (prev. 7.1781).
FIXED INCOME
10yr UST Futures
10-year US Treasury futures were kept afloat following the latest bout of dovish Fed rhetoric, albeit with the upside limited following recent advances and poor demand at the 3yr auction.
Bund futures were indecisive heading into incoming German inflation data.
10-year JGB futures traded marginally higher after recent gains in global counterparts although further upside was capped following mostly softer results from the 5yr JGB auction.
COMMODITIES Crude futures were marginally higher but with gains capped in quiet trade amid a lack of pertinent catalysts and with this week's inventory reports delayed owing to the recent federal holiday. US and Venezuela Near Deal on Sanctions Relief The US and Venezuela are near a deal on sanctions relief for fair elections in which some individual sanctions on Maduro's entourage would be lifted, according to Bloomberg sources. Spot gold traded sideways amid an uneventful dollar ahead of the FOMC Minutes release. Copper futures were rangebound and failed to benefit despite the China stimulus hopes.
Key economic data and events to watch on Wednesday include:
German CPI (Final)
US MBA Purchase Applications and Producer Price Index
ECB Consumer Expectations Survey
FOMC Minutes
Speeches from Fed Governors Michelle Bowman, Christopher Waller, Lael Brainard, and Raphael Bostic
Supply from the UK, Germany, and US
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team