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Markets Update: APAC Stocks Sink on Yield Fears, Mixed China Data; ASX 200 Falls, Nikkei Retreats from Heights, HK & Shanghai Slide; Europe Prepares for Lower Open.
Economic Calendar
Global Markets Roundup: 17 Jan 2023
Asian markets succumbed to selling pressure on Wednesday, as the recent climb in yields spooked investors and mixed Chinese economic data offered little relief. China's Q4 GDP growth of 5.2% came in below expectations of 5.3%, though it marked an improvement over the previous quarter's 4.9%. However, other indicators painted a mixed picture, with industrial production (IP) exceeding estimates at 6.8% year-on-year (YoY) while retail sales missed the mark at 7.4% YoY. The sentiment spilled over to Europe, with Euro Stoxx 50 futures down 0.9% after the cash market closed 0.2% lower on Tuesday. US equities are also expected to follow suit, with early indications pointing to a weak open. DXY, the US Dollar Index, hovers above 103.50, reflecting the broader risk-averse mood. The Japanese Yen (JPY) remains under intense pressure, while Cable (GBP/USD) clings to the 1.26 area ahead of crucial UK inflation data.
ASX 200 Sinks Under Commodity Slump: Australia's benchmark ASX 200 slumped, weighed down by losses in commodity-linked sectors. Despite gains in defensives and tech, the broader market couldn't resist the pull of falling resource stocks. Nikkei's Rally Fizzles: Japan's Nikkei 225 initially enjoyed a boost from a weaker yen, briefly surpassing the 36,000 mark. However, the euphoria proved short-lived, as the index succumbed to the global risk-off sentiment and retreated, erasing all early gains. Hang Seng & Shanghai Retreat: Hong Kong's Hang Seng and mainland China's Shanghai Composite fell prey to the bearish undercurrent. Mixed economic data from China offered little solace, and Hong Kong faced additional pressure from heavy losses in tech and property sectors. The latter suffered from a decline in Chinese home prices, adding to the downward drag.
FX:
DXY Holds Highs: The US Dollar (DXY) continued its climb, remaining above 103.00 after Tuesday's surge fueled by risk aversion, rising yields, and hawkish remarks from Fed official Waller.
EUR/USD Tumbles: The Euro (EUR/USD) suffered under dollar strength, dipping below 1.0900 despite ECB officials reiterating their stance against near-term rate cuts.
GBP/USD Subdued: The Pound (GBP/USD) remained muted amid a downbeat mood and softer wage data, with UK CPI looming.
USD/JPY Steady Climb: The Japanese Yen (JPY) weakened further against the dollar (USD/JPY) surpassing 147.00, driven by a firmer DXY and wider yield gaps.
AUD and NZD Decline: Antipodean currencies like AUD and NZD edged lower, largely influenced by the global risk-off sentiment.
COMMODITIES:
Crude Flatlines: Crude oil prices remained subdued after Tuesday's volatility, with a stronger dollar and risk aversion offsetting rising geopolitical tensions. Texas refinery disruptions from extreme weather had minimal impact.
Copper Mixed: Copper futures were weighed down by the broader market weakness and mixed data from China, the world's largest copper consumer.
Gold Retreats: Spot gold re-tested Tuesday's lows, slipping below its 100-day moving average (USD 2,035) due to a firmer dollar.
FIXED INCOME:
UST Yields Steady: US Treasury yields bounced slightly off Tuesday's lows but held below 112.00 as Waller's comments tempered aggressive Fed cut expectations. Busy global data and bond supply, including the US 20-year auction, are in focus.
Bund Struggles:Â German Bund yields hovered near a month low ahead of a 30-year auction and ECB's resistance to immediate rate cuts.
JGBs Track Lower: Japanese Government Bonds (JGBs) mirrored the global sell-off, with the absence of BoJ buying adding pressure.
Key events for the rest of the day include:
UK CPI:Â This figure could spark further volatility in the Pound if it deviates from expectations.
EZ HICP (Final):Â The final reading of Eurozone inflation could influence the European Central Bank's (ECB) monetary policy decisions.
US Import Prices, Retail Sales, Industrial Production:Â These data points will offer insights into the health of the US economy.
Japanese Machinery Orders:Â A gauge of business investment in Japan.
Fed Beige Book:Â The Federal Reserve's regional economic report could provide clues about upcoming policy moves.
Comments from ECB officials and Fed members:Â Central bank pronouncements will be closely watched for any shifts in their respective stances.
Earnings releases from Pearson, US Bancorp, and Citizen Financial Group are also on the agenda.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team