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Markets Update: Asia-Pacific Markets Lower on Weak Chinese Data
Today's important market events:
[EUR] German Unemployment Change (May) - 09:55 CEST
[EUR] German CPI (MoM - May) - 14:00 CEST
[CAD] GDP (MoM - Mar) - 14:30 CEST
[EUR] ECB President Lagarde Speaks - 14:30 CEST
[USD] JOLTs Job Openings (Aprt) - 16:00 CEST
Global Markets Roundup: 31 May 2023
Asia-Pacific stocks were mostly lower on Tuesday following the mixed handover from Wall Street, where sentiment was clouded as hardliners voiced opposition to the debt ceiling bill.
The U.S. House Committee voted 7-6 to advance the debt ceiling bill, which sends it to the full House for approval. However, it is unclear whether the bill will pass the House, as some Republicans are still opposed to it.
European equity futures are indicative of a softer open with the Euro Stoxx 50 -0.4% after the cash market closed down 0.7% yesterday.
Chinese Manufacturing and Non-Manufacturing PMI data disappointed, with the former printing at its weakest reading YTD.
The U.S. dollar index (DXY) is firmer and back on a 104 handle, while the euro (EUR/USD) and British pound (GBP/USD) linger below 1.07 and 1.24 respectively. Antipodean currencies are lagging.
In Australia, the ASX 200 was led lower by underperformance in the commodity-related sectors, with energy the worst hit after oil prices slumped by more than 4% yesterday. The mood was also not helped by firmer-than-expected monthly CPI. In Japan, the Nikkei 225 was pressured by data releases, with Industrial Production printing a surprise contraction and Retail Sales missing forecasts. Early jitters were also caused by North Korea's failed satellite launch. In Hong Kong, the Hang Seng and Shanghai Comp. declined, with Hong Kong dragged lower by notable weakness in the local blue-chip tech stocks and following disappointing Manufacturing and Non-Manufacturing PMI data. The former printed at a second consecutive month in contraction territory and its weakest reading YTD. In the United States, equity futures were lacklustre after the weak Chinese data, with the Emini S&P moving closer to a retest of support at 4,200.
European equity futures are indicative of a softer open with the Euro Stoxx 50 -0.4% after the cash market closed down 0.7% yesterday.
In the currency market, the U.S. dollar index (DXY) is firmer amid the risk-off conditions and after bouncing back from a brief dip below the 104.00 level. The focus stateside remains on the debt ceiling bill after hardliners voiced their opposition, although the House Committee voted to advance it to the full House for approval. There were also hawkish comments from Fed's Mester who sees no compelling reason to wait for a fresh rate hike.
The euro (EUR/USD) faded the prior day's advances and retested the 1.0700 level to the downside. The British pound (GBP/USD) marginally softened to beneath the 1.2400 handle owing to the firmer greenback. The Japanese yen (USD/JPY) was flat after the Japanese currency recently benefitted from narrower yield differentials. The Australian dollar (AUD/USD) and New Zealand dollar (NZD/USD) were lower amid the downbeat sentiment and after the disappointing Chinese PMI data offset the initial knee-jerk reaction in AUD/USD from the firmer monthly Australian CPI data.
In the fixed income market, 10-year U.S. Treasury futures held on to the gains from yesterday's rally after the debt default risk unwound, with month-end buying and risk aversion also keeping treasuries afloat. Bund futures extended on this week's advances with the momentum helped by the recent soft Spanish CPI and weak EU sentiment. 10-year Japanese government bond (JGB) futures traded marginally higher after the gains in global counterparts and weak Japanese data.
In the commodity market, crude oil futures remained subdued amid weak Chinese PMIs and after yesterday's 4% drop. Iraqi cabinet approved USD 417 million for the construction of a third offshore export pipeline. Spot gold was rangebound as a firmer dollar capped off the prior day's advances. Copper futures declined following the faster pace of contraction in Chinese factory activity.
Looking ahead, highlights include:
U.S. JOLTS & Chicago PMI
French, Italian & German Preliminary CPI
German Unemployment
Chinese NBS PMIs
ECB Financial Stability Review
Remarks from ECB's Lagarde, Fed's Bowman, Jefferson, Harker & Collins
Supply from Germany
Overall, market sentiment is cautious ahead of key economic data and central bank speeches. Investors will be closely watching developments in the U.S. debt ceiling debate and the Chinese economy.
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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