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Markets Update: Softer Inflation and Yields Boost Australian Equities as Asia Earnings Season Picks Up + FOMC Decision Looms.
Economic Calendar
Global Markets Roundup: 26 July 2023
Asian stocks traded mixed on Wednesday, with most bourses lacking firm direction ahead of the Federal Open Market Committee (FOMC) meeting later today. The Shanghai Composite Index rose 0.2%, while the Hang Seng Index fell 0.1%.
European Equity Futures Softer
European equity futures were indicative of a softer open, with the Euro Stoxx 50 down 0.4% after the cash market closed up by 0.2% yesterday. Investors are awaiting the outcome of the FOMC meeting, which is expected to result in a 75 basis point hike in interest rates.
DXY Constrained on 101 Handle The dollar index (DXY) was constrained on a 101 handle, with the euro (EUR/USD) languishing below 1.11 and the British pound (GBP/USD) eyeing 1.29. The Australian dollar (AUD) was soft post-CPI, with softer-than-expected inflation data from Australia supporting the argument for the Reserve Bank of Australia (RBA) to continue its pause on rates at next week's meeting.
The ASX 200 was leading the way. The index was boosted by softer-than-expected inflation data from Australia, which supported the argument for the Reserve Bank of Australia (RBA) to continue its pause on rates at next week's meeting.
Nikkei 225 Sways Between Gains and Losses
The Nikkei 225 swung between gains and losses, with the mood indecisive as softer Services PPI data from Japan added to the second-guessing surrounding this week's Bank of Japan (BoJ) meeting.
Hang Seng and Shanghai Comp Weaker
The Hang Seng and Shanghai Composite were weaker after the prior day's stimulus boost lost steam. However, downside was limited owing to wide expectations for further support measures and after the People's Bank of China (PBoC) upped its liquidity efforts.
US Equity Futures Contain Overnight
US equity futures were contained overnight as participants digested the latest big tech earnings and guidance.
FX
The dollar index (DXY) was stuck within a tight range as participants await the FOMC meeting where the Fed is widely expected to raise rates by 25bps.
EUR/USD Languished Firmly Beneath 1.1100
The euro (EUR/USD) languished firmly beneath the 1.1100 handle following this week's bout of weak data from Europe.
GBP/USD Slightly Easing Back
The British pound (GBP/USD) slightly eased back from yesterday's peak and brief roundtrip into the 1.2900 territory.
USD/JPY Indecisive
USD/JPY was indecisive and traded on both sides of the 141.00 level amid pre-BoJ tentativeness. The Australian dollar (AUD) and New Zealand dollar (NZD) were pressured alongside a weaker yuan and after softer-than-expected inflation data from Australia supported the argument for the RBA to continue its pause on rates at next week's meeting.
FIXED INCOME 10-year US Treasury futures mildly rebounded from the recent bear flattening which was spurred by strong consumer confidence data and a lacklustre 5-year auction, while the focus turns to the approaching FOMC policy decision. Bund Futures Uneventful Bund futures were uneventful but kept afloat after the recent tailwinds from the weak German Ifo data. 10yr JGB Futures Ultimately Benefitted 10-year Japanese government bond (JGB) futures ultimately benefitted after softer Services PPI data and the BoJ's presence in the market for nearly JPY 1.5tln of JGBs on top of its daily fixed-rate operations.
COMMODITIES
Crude futures pulled back following yesterday's stimulus-driven advances with slight pressure from the bearish private sector inventory data which showed a surprise build in crude and narrower gasoline drawdown.
Spot Gold Traded Flat
Spot gold traded flat alongside an uneventful greenback in the pre-FOMC twilight.
Copper Futures Lacklustre
Copper futures were lacklustre after the recent stimulus-related momentum in China wore thin.
Looking Ahead Highlights for the day include US New Home Sales, FOMC Policy Announcement and Fed Chair Powell's Press Conference, Earnings from Porsche AG, Santander, Danone, Deutsche Bank, Stellantis, Equinor, Airbus, GSK, Lloyds, Boeing, Meta & Coca-Cola.
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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