chinese stocks

Say something hawkish, I'm giving up on you

By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  

The week started on a positive note on both sides of the Atlantic Ocean. Equities in both Europe and the US gained on Monday. The tech stocks continued to do the heavy lifting with Nvidia hitting another record. The positive chip vibes also marked the European trading session; the Dutch semiconductor manufacturer ASML regained its status as the third-largest listed company in Europe, surpassing Nestle, thanks to an analyst upgrade. 

Moving forward, the earnings announcements will take the center stage, with Netflix due to announce its Q4 results today after the bell. The streaming giant expects to have added millions more of new paid subscribers to its platform after it scrapped password sharing last year.  

Away from the sunny US stocks, the situation is much less exciting for China. Right now, the CSI 300 stocks trade near 5-year lows and Chinese stocks listed in Hong Kong are

Speaking Of Rallying Chinese Stocks, Quite Unchanged Bitcoin Price, BoE, Fed And Central Bank Of Turkey Interest Rates Decisions

Speaking Of Rallying Chinese Stocks, Quite Unchanged Bitcoin Price, BoE, Fed And Central Bank Of Turkey Interest Rates Decisions

Swissquote Bank Swissquote Bank 17.03.2022 15:43
Chinese stocks had their best day since 2008 yesterday, as the government said it will ease the crackdown, support property and technology stocks and stimulate economy. Nasdaq’s Golden Dragon China index gained close to 33%, yet risks prevail: we are still in a China that is no longer the land of opportunity of before Xi Jinping. Plus, US maintains a hardline on the Chinese listings in the US, insisting that the companies listed in the US should provide complete access to audits, with the threat of getting de-listed if they don’t comply. The Federal Reserve (Fed) raised its interest rate by 25bp as expected for the first time since the beginning of the pandemic, and more importantly, said that the rate hikes will continue to tame inflation as the US economy looks strong enough to withstand a rapid normalization to avoid pushing the Fed into a darker stagflation environment. The kneejerk reaction to the decision was an early selloff then a strong rebound.The question is, could it last? Elsewhere, Bitcoin remained stoic despite a broad based risk rally, while the US dollar eased allowing the EURUSD trade above 1.10, and Cable above 1.31. Today, the Bank of England (BoE) and the Central Bank of Turkey (CBT) will give their latest monetary policy verdicts. Watch the full episode to find out more! 0:00 Intro 0:25 Chinese stocks rally: is it time for a healthy rebound? 3:30 Fed hikes & says it will hike more 5:37 Market reaction to Fed decision 7:03 Bitcoin stoic 8:06 USD eases, allowing euro and pound to recover 8:24 BoE to hike for the third consecutive meeting 8:59 Turkey's decision is a... nonsense. Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
The release of Chinese GDP, Bank of Canada interest rate decision and more - InstaForex talks the following week (part I)

China Stocks Go Up As There Might Be More Buybacks Coming

Marc Chandler Marc Chandler 23.03.2022 14:35
March 23, 2022  $USD, Canada, China, Currency Movement, Federal Reserve, Japan, UK Overview: The capital markets are subdued through the early European morning.  The continued sell-off of the yen (almost 5% this month) and anticipation of more share buybacks in China helped lift equities in the Asia Pacific after the strong performance of the US indices yesterday. The S&P 500 closed above its 200-day moving average for the first time in a month and reached its highest level since February 9.  The NASDAQ closed at its best level since February 16, around 13% above the March 14 low.  European shares are threatening to snap a five-day advance.  US futures are better offered.  The sell-off in bonds may be taking a breather in Europe, where yields are mostly 3-4 bp lower.  The 10-year Treasury yield poked above 2.40% before softening to around 2.36%.  The dollar is firm against most of the major currencies, while emerging market currencies are mixed.  The JP Morgan Emerging Market Currency Index is posting a small gain for the second consecutive session.  Gold is flattish in a a little more than a $5-range on either side of $1925, the middle of the $1900-$1950 broader range.  May WTI is s firmer, above $111 in the European morning.  A move above yesterday's $113.35 high could signal another run at the high from earlier this month around $126.40.  US natgas is consolidating after yesterday's nearly 6% rally.  Europe's natgas benchmark is up almost 4% after yesterday's 3.4% advance.  It fell almost 5% on Monday.  Iron ore rose nearly 2% today, its first gain of the week.  It lost about 4.7% over the past two sessions.  Copper is quiet inside yesterday's narrow range.  May wheat is edging higher and recouping yesterday's small decline.  It is consolidating after rallying 5.2% on Monday.    Asia Pacific Chinese tech companies are in play.  Alibaba announced it was expanding its share buyback efforts yesterday and Xiaomi did the same today.  More tech firms, rich in cash, are expected to follow suit in the coming days.  Hong Kong Technology Index has rallied 40% from last week's low, which still leaves it around 50% below last year's peak.   The dollar reached JPY121.40 today.  At the end of last week, BOJ Governor Kuroda seemed to approve the yen's slide, by observing that the weakness was still helpful for the economy overall. The question that naturally arises is there a BOJ's pain threshold.  Some observers see it around JPY125, based on Kuroda's comments from back in 2015. In 2015, the dollar peaked near JPY125.85.  More immediately, the BOJ faces a fresh challenge to its Yield Curve Control stance, which caps the 10-year yield at 0.25%.  It rose to almost 0.23%, just shy of last month's high that prompted the BOJ offer to buy bonds there.  Still, until the Japanese or US pain threshold is found, the market still seems content to buy dollars on pullbacks against the yen.  Initial support now is seen ahead of JPY120.50.  Note that the one-month put-call skew (25 delta risk reversal) traded in favor of US dollar calls for the first time since last November.  The three-month skew narrowed to almost -0.38%, the least in almost five-months.  The skew typically sees dollar calls sell at a discount and it is often linked to Japanese exporters protecting their dollar receivables.  The Australian dollar extended its advance to almost $0.7480, its best level since early last November as well to approach its upper Bollinger Band.  It met some resistance and slipped to around $0.7450.  Initial support is seen in the $0.7430-$0.7440 area.  The greenback's strength is proving too much for the Chinese yuan.  It has recorded higher lows for the fourth consecutive session and is trying to establish a foothold above CNY6.37.   Recall, that the US dollar bottomed late last month near CNY6.3065.  The PBOC set the dollar's reference rate at CNY6.3558.  The median projection in Bloomberg's survey was CNY6.3540.  The Chinese 10-year premium over US Treasuries has fallen to almost 40 bp, the least since February 2019.    Europe It is all about the UK today.   First, late yesterday, the US and UK struck a deal that will lift the odorous steel and aluminum tariffs imposed by the Trump administration on national security grounds.  Rather than reverse itself immediately, the Biden administration used the tariffs to get concessions from Europe and Japan as well that will limit the metal exports to the US-based on historic market share.  The UK agreed to lift its retaliatory tariffs.  Second, the UK February CPI was a little higher than expected.  The CPIH, which includes owner-occupied cots, rose to 5.5% from 4.9% in January.  The median forecast (Bloomberg survey) was for 5.4%.  After falling by 0.1% in January, CPI rose 0.8% in February.  The market looked for a 0.6% gain.  Core CPI is up 5.2% from a year ago, accelerating from 4.4% in January.  Turning to producer prices, output PPI rose 0.8%, slightly less than expected for a 10.1% year-over-year pace.  It had risen 9.9% in January.  Input price pressures were a bit stronger than expected, rising 1.4% in February after a revised 1.5% gain in January (initially 0.9%).  This lifted the year-over-year rate to 14.7% from a revised 14.2% pace.   The odds of a 50 bp move at the next MPC meeting (May 5) has edged up from around 25% chance at the end of last week to about 38% today.   Still on tap is Chancellor of the Exchequer Sunak's Spring Budget Statement.  Reports have played up the likelihood of a modest cut in the fuel duty and perhaps a higher threshold for the health insurance tax.  There focus seems to be on easing the squeeze on the cost of living, which is set to worsen next month as the price cap on energy bill and taxes are set to rise.  Yesterday's news that the budget deficit is smaller than expected through the first 11 months of the fiscal year gives the Sunak some room to maneuver, but he is not expected to exhaust it. The euro recovered from yesterday's dip to about $1.0960, which met the (50%) retracement objective of the recovery form the March 7 test on $1.08.  However, the buying dried up near $1.1040.  A break of that $1.0960 area could spur a quick move to $1.0930, while a bounce needs to rise through $1.1060 to be anything of note.  The flash PMI due tomorrow are expected to have softened but a significant disappointment may play on fears that the war and energy shock will drive the eurozone into a recession.  Sterling finally pushed above the $1.3200 cap yesterday and traded to almost $1.33 today before meeting strong offers.  It was pushed back to a little below $1.3220 in the European morning.  Provided the $1.3200-level holds now, our target near $1.34 is still reasonable.   America There was only one dissent from the FOMC meeting last week as Bullard wanted to hike by 50 bp.  Many observers were critical of the Fed for not taking more decisive action.  However, the dispute at the Fed appears to be over minor tactical differences.  Chair Powell came out swinging earlier this week and the market took the bait and now prices in not the 150 bp of hikes this year, which would imply a 25 bp hike at the remaining six meeting.  Instead, it is pricing in near 190 bp of tightening.  That means the Fed funds futures are pricing in not just one 50 bp move but is favoring a second 50 bp move too.  There seems to a growing consensus to raise the Fed funds rate toward neutral, and the difference between the doves and hawks seem to be narrow.  Today, the market hears from Powell (at the BIS again), San Fran Fed President Daly, and St. Loise Fed's Bullard.  The US economic calendar features MBA mortgage applications and February new home sales.  Typically, they are not market moving. Tomorrow is a different story: weekly jobless claims, durable goods orders, and the flash PMI.  There have been two developments in Canada to note.  First, the railroad strike ended with the help of federal mediation after two days.  The strike had threatened to further disrupt the supply chains, especially for potash ahead of the beginning of the new planting season.  Second, Prime Minister Trudeau secured support for his minority government through a deal with the New Democrat Party.  In exchange for support in confidence votes, Trudeau will push for key elements in the NDP agenda, which overlaps in parts with his campaign promises.  New initiatives in housing, health care, and the environment are expected.  The net effect is that fiscal policy may not be as tight as expected.  That policy mix, tighter monetary and easier fiscal policy tends to be supportive of a currency.  Also, the market recognizes that easier fiscal policy may push the Bank of Canada to tighten monetary policy quicker.  The odds of a 50 bp move at next month’s meeting (April 13) increased from about 55% at the end of last week to a little more than 70% now.   Mexico will report its bi-weekly CPI figures for the first half of March tomorrow alongside January retail sales.  Late tomorrow, Banixco is expected to deliver its third consecutive 50 bp increase in the overnight rate to 6.50%.  Argentina and Paraguay hiked yesterday.  Chile and Colombia are expected to hike next week.  Separately, reports suggest that Mexico will not carry out its plans to cut oil exports in half this year and cease them entirely next year.  President AMLO already seemed to be softening his push.  The windfall from the surge in prices appears too good to pass up.  That said, PEMEX output appears to have fallen by around 200k barrels a day from the end of 2021.     The US dollar appears to be forging a base around CAD1.2565 this week.  A move above CAD1.2625 might signal a near-term low is in place.  Recall that the greenback peaked last week by CAD1.2870.  There has been a small shift in rate differentials in the Canadian dollar's favor.  The US 2-year premium has narrowed from around 17 bp on March 9, the most since Q3 19, to around three basis points today.  The 10-year differential has switched and now Canada offers a small premium (~5-6 bp), which is the most since the end of last year.  The US dollar is also edging lower against the Mexican peso and is testing the MXN20.25 area. The low for the year was set in late February near MXN20.1575.  The 200-day moving average (~MXN20.4250) has capped the greenback so far this week.     Disclaimer
The Grains Sector Saw Continued Demand| Acceleration In The Sale Of Gold

Crude Oil, Chinese Stocks, S&P 500, ECB And US Yields [VIDEO]

Swissquote Bank Swissquote Bank 04.04.2022 11:04
MarketTalk: What’s up today? | Swissquote Crude oil consolidates near the $100pb as the latest pandemic news from China and the massive US release from strategic reserves cool down the positive pressure, but there are uncertainties on whether the US could really release 1 million barrels per day for six months to keep oil prices under control. US futures are in the negative this morning, although the S&P500 ended last week on a last-minute rally. The rising US yields and the curve inversion make investors uncomfortable, and the Federal Reserve (Fed) hawks remain in charge before Wednesday’s FOMC minutes. Gold is under the pressure of higher US yields, and may not benefit from a renewed equity selloff, if the selloff is due to the rising yields. But geopolitical tensions could throw a floor under a further selloff, if geopolitical tensions escalate amid the West preparing to announce more sanctions against Russia. Elsewhere, Chinese stocks rally on news that China will let the US authorities access the full auditing reports of companies listed in the US. Bitcoin is stuck within the $45/48K area and GameStop offers a strong intra-day volatility, though not much fundamentally-supported action in medium run. Watch the full episode to find out more! 0:00 Intro 0:30 US reserve release & Covid news soften oil bulls' hands 2:28 European inflation boosts ECB hawks, but... 3:47 US yields extend progress ahead of Wed's FOMC minutes 5:06 Gold, supported by geopolitical tensions, pressures by yields 6:04 S&P500, Nasdaq: toppish? 7:18 Chinese stocks rally on encouraging audit news 9:02 Bitcoin stuck with $45/48K range Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
Many Investors Wonder What Stocks To Buy Today As Chinese Tech Stocks Are Recovering

Many Investors Wonder What Stocks To Buy Today As Chinese Tech Stocks Are Recovering

Alex Kuptsikevich Alex Kuptsikevich 05.04.2022 10:19
Nasdaq100 has added over 2% on Monday, in contrast with a more modest gain of 0.8% for the S&P500 and a barely notable 0.3% rise for the Dow Jones. But this is not a signal of general optimism from market participants; instead, it’s a switch in focus to Chinese companies. Often the outperformance of technology-rich Nasdaq is taken as a signal of an accelerating economy and a move by investors to look for assets that outperform the broader market during an economic boom. But along with that, we would see the Russell Index, which includes 2,000 small US stock market companies, outperform. And it was only up 0.2% over Monday, struggling to move into positive territory by the end of the day yesterday. On the other hand, Chinese companies are going from weak to growth drivers. However, this is nothing more than a recovery from lows after a year of aggressive declines. Earlier in March, China’s H-shar lost more than half its value in 13 months of sell-off. Hong Kong’s Hang Seng was down 40% at its lowest point, plunging to 2016 lows. In the first half of March, the most significant acceleration came on signals that China and the US had moved from trade wars to financial wars as the latter threatened to delist. However, financial market turbulence is the last thing Xi Jinping needs this year, as there will be an election at the end of it, where he will be the leading candidate. Improving the economic situation is often the most effective way for the incumbent to gain electoral support. And China has a lot to work with. Much the same can be said for the US, where the November Senate elections will be held. Democrat Biden’s record-low approval rating plays against his party in the coming elections and the rising stagflation threat. The threat of delisting from the US is a blow to prestige, but it also closes off access to the softest financial terms for new companies and the deepest pool of liquidity. China could only afford it in the event of mania in Chinese markets and a booming Chinese economy. But that is not the case right now. The PRC economy lags behind its forecast growth trajectory due to continued covid lockdowns. Achieving the expected 5.5% GDP growth this year requires stimulus and easing of monetary policy, regardless of inflation risks and without regard to the rest of the world, which is tightening policy. This is a favourable environment for the market, at least for the time being. The Chinese equity market thus ceases to be a ‘sick man’, dragging global equity indices down and suppressing investor interest. On the contrary, even after returning to 5-week highs, Chinese equities still look very cheap, turning into a leading idea for the markets with a 9% jump in Baidu and a 6.6% rise in Alibaba on Monday. Placed amongst others in the US, Alibaba and Baidu, the biggest of which are now pulling the indices up, spreading positivity across the entire tech sector. Twitter’s 27% jump in shares on reports of Musk’s 9.2% stake in the company says more about the market’s mood to look for growth drivers than how much this passive share of the Tesla CEO can help the social network. And that’s good news a couple of weeks before the start of the new reporting season after a worrying first quarter.
FX Daily: Eurozone Inflation Impact on ECB Expectations and USD

Not Again! CSI 300 And Hang Seng - COVID Makes Stock Market Struggle! EuroStoxx 600 and S&P 500 (SPX) Don't Set A Good Example

Marc Chandler Marc Chandler 25.04.2022 18:31
April 25, 2022  $USD, Australia, China, Currency Movement, Federal Reserve, France, Germany Overview:  Fears that the Chinese lockdowns to fight Covid, which have extended for four weeks in Shanghai, are not working, and may be extended to Beijing has whacked equity markets, arrested the increase in bond yields, and lifted the dollar.  Commodity prices are broadly lower amid concerns over demand.  China's CSI 300 fell 5% today and Hong Kong's Hang Seng was off more than 3.5%.  Most of the major markets in Asia Pacific were off more than 1%.  Europe's Stoxx 600 is off around 1.9% after falling 1.4% last week.  US futures are about 0.7%-0.8% lower. The S&P 500 fell last week for the third consecutive week, the longest losing streak in 18 months.  The US 10-year Treasury yield is almost seven basis points lower at 2.83%.  European benchmark yields are 4-6 bp lower.  The BOJ bought JPY727 bln of 10-year bonds at the pre-committed fixed rate operation, more than in the previous three operations last week combined.  The yield slipped half of a basis point.  The dollar rides high.  It has appreciated against all the major currencies but the yen. The Australian dollar, Scandis, and sterling have been hit the hardest and are around 0.9-1.2% lower in the European morning.  Emerging market currencies are heavy as well.  Hungary, Mexico, and China have seen their currencies decline by around 1% to lead the complex.  Gold fell to new lows for the month around $1912 before stabilizing.  June WTI is 4.3% lower near $97.70 after falling around 4% last week.  US natgas is extending last week's 10.5% sell-off, while the European benchmark is up 2.5% after a flat showing last week.  Iron prices are off 8.7%, after tumbling closer to 12% at one juncture today.  It fell a little less than 5% last week.  Copper is off around 2.1% after declining about 3% last week.  July wheat is up about 0.5% as it tries to snap a four-day slide.   Read next: Tightening Alert! How Have Exchange Rates Of Singapore Dollar (SGD), NZD, Canadian Dollar And Korean Won (KRW) Changed?| FXMAG.COM Asia Pacific China's Covid has emerged as a powerful economic force in its own right.   It is threatening demand for commodities and threatening to extend supply chain disruptions.  Shanghai reported a record number of fatalities, and the infection is spreading to Beijing.  The Chaoyang district will submit to three days of testing this week for people who live and/or work in the area.  Reports suggest 14 smaller communities have been sealed and another 14 have imposed limitations on movement.  China's demand for gasoline, diesel, and jet fuel has reportedly fell by 20% year-over-year, which may translate to 1.2 mln barrels of oil a day.   The US has threatened unspecified action if Beijing's new security pact with the Solomon Islands result in a permanent Chinese military presence.   While the US has defended Ukraine's right to make its own foreign policy decisions, it seems to want to limit Solomon Island's choices.  Prime Minister Sogavare has articulated his own 3 No's Policy.  He says that the secret treaty has no provision for a Chinese military base, no long-term presences, and no ability to project power from the islands. The Solomon Islands are about 2k kilometers of Australia's coast.    Read next: President Of France To Be Chosen. It Is Another Factor Which Is Shaping Markets| FXMAG.COM The dispute over the Solomon Islands has emerged as a campaign issue in the May 21 Australian elections.  Prime Minister Morrison, who seeks a fourth term, has defended his foreign policy, and tried shifting the focus back to domestic issues with a promise to cap tax revenue at 23.9% of GDP and A$100 bln of tax relief over the next four years if re-elected.  Government revenues were 22.9% of GDP in FY21.  Labor leader Albanese has been diagnosed with Covid at the end of last week.  This disrupted his campaign in the tight contest.  Morrsion had contracted the disease in early March.   The dollar initially approached JPY129 but falling US yields saw it come off and traded below JPY128, where a $425 mln option expires today.   The greenback remains in the range set last Wednesday (~JPY127.45-JPY129.40).  Indeed, it is trading within the pre-weekend range (~JPY127.74-JPY129.10).  The takeaway is two-fold.  First the exchange rate is still closely tracking the US 10-year yield.  Second, after surging in March and most of April, the exchange rate is consolidating.  The Australian dollar is falling sharply for the third consecutive session.  It fell 1% last Thursday and 1.75% before the weekend and is off another 1% today. It is lower for the 11th session in the past 14.  It fell to a two-month low near $0.7150 in late Asian turnover before stabilizing.  The $0.7200 area now offers resistance.  The sell-off of the Chinese yuan continued.  The greenback gapped higher and never looked back.  Recall that the dollar settled around CNY6.3715 on April 15.  A week later, last Friday, it settled above CNY6.50 and today, pushed over CNY6.56.  It is the greenback's 5th consecutive gain and today's advance of a little more than 0.9% is the largest advance since March 2020. The dollar is trading at its best level in nearly a year and a half.  The PBOC set the dollar's reference rate at CNY6.4909, slightly lower than market projections (CNY6.4911 in the Bloomberg survey). The next key chart area is CNY6.60.   Europe Macron was easily re-elected with a roughly 58%-42% margin.   Partisans, perhaps trying to bolster the turnout and some press accounts seemed to exaggerate Le Pen's chances.  No poll showed her in the lead.  Still, the euro initially trading higher (~$1.0850) before falling to almost $1.07 before the end of the Asia Pacific session.  The June parliamentary election will shape Macron's second term and his ability to enact his program.  Separately Slovenia voted not to grant Prime Minister Jansa another term.  This further isolates Hungary's Orban.  Golob, the former head of the state-owned power company before dismissed by Jansa, will lead what appears to be a center-left government.   Last week, Germany's flash PMI was mostly better than expected.   Recall that helped by the surprising gain in the service PMI, the composite fell to 54.5 not the 54.1 economists expected (median, Bloomberg survey).  Today, the IFO survey was also better than expected.  The current assessment ticked up to 97.2 from 97.1, while the expectations component rose to 86.7 from a 84.9.  The overall business climate reading rose to 91.8 from 90.8.  Separately, the government is expected to announce a supplemental budget on Wednesday that will boost this year's net new debt to at least 140 bln euros.  This is a 40 bln euro increase to fund government measures to cushion the impact of the war and the surge in energy prices.  Some of the off-budget 100-bln euro defense spending initiative will may also be funded this year.   The euro traded to almost $1.0705 in late Asia Pacific turnover, its lowest level since March 2020.   There is a 945 mln euro option struck at $1.07 that expires today.  The pre-weekend low near $1.0770 may now serve as resistance.  There are large options at $1.08 expiring over the next two days (1.6 bln euros tomorrow and 1.2 bln euros on Wednesday). The Covid-low was set in March 2020 near $1.06.  Sterling has been pounded again.  It dropped nearly 1.5% before the weekend, a roughly two-cent fall that took it to around $.12825.  It has lost another cent today to about $1.2730.  While we noted chart support near $1.2700, the next important chart area is closer to $1.25.  It finished last week below its lower Bollinger Band, and it remains well below it (~$1.2850) today. In fact, it is more than three standard deviations from the 20-day moving average (seen near $1.2755).   America St. Louis Fed President Bullard opined last week that a 75 bp hike may be needed at some juncture.   He explicitly said that it was not his base case.  Yet some in the markets, and more in the media seemed to play it up.  No other Fed official seemed to endorse it; Fed futures are pricing in a 51 bp for next week rather than 50 bp.  The Fed's quiet period ahead of the May 4 FOMC meeting means no more official talk.  Today's economic calendar features the Chicago Fed's March national activity index, which is reported with too much of a lag to provide new insight or a market reaction.  The Dallas Fed's April manufacturing survey is due as well.  The early Fed surveys have not generated a consistent signal.  The Empire State survey was stronger than expected while the Philadelphia Fed survey was weaker than anticipated.  The Dallas survey is expected to have softened.   Canada's calendar is light until Friday's February GDP print.   The Bank of Canada does not meet until June 1.  The swaps market currently has a little more than a 25% chance that it hikes by 75 bp instead of 50 bp.  However, the Canadian dollar itself seems more sensitive to the risk-off impulse spurred by falling equities than the policy mixed in Canada.   Mexico reports IGAE economic activity survey for February.   It is too dated to have much impact, and in any event, is being overwhelmed by the risk-off attitude.  The bi-weekly CPI report, covering the first half of April, released before the weekend, was stronger than expected.  The headline rate rose to 7.72% and the core rate rose above 7% for the first time in this cycle.  It is particularly disappointing because seasonal considerations, like the summer discount on electricity taxes, often point to less price pressures.  The risk of a 75 bp hike at the May 12 Banxico meeting is increasing.   Read next: How Are Markets Doing? US Bonds, EuroStoxx 600, CSI 300 And More| FXMAG.COM The US dollar jumped 0.65% against the Canadian dollar last Thursday and slightly more than 1% before the weekend.   It is up another 0.2% in the European morning to around CAD1.2740, after having approached CAD1.2760 in Asia Pacific turnover.  The greenback finished last week above its upper Bollinger Band and has spent most of today's session above it (~CAD1.2720).  The market is over-extended but there is little chart resistance ahead of CAD1.28.  The peso's fall is also continuing.  The US dollar traded above its 200-day moving average (~MXN20.42) for the first time since March 18.  It is also above the (38.2%) retracement objective of the slide since the March 8 high (~MXN21.46), which is found around MXN20.39.  The next retracement (50%) is closer to MN20.60 and the measuring objective of the potential double bottom is near MXN20.60.     Disclaimer
USD/JPY Technical Analysis: Awaiting Breakout from Consolidation Range

Asian equities follow Wall Street lower | Oanda

Jeffrey Halley Jeffrey Halley 10.05.2022 11:05
Asian markets fall, ex-China Wall Street suffered another day of recession fears overnight, with equities slumping once again, relying on Bostic’s comments to salve the wounds and cap US yield rises and the US dollar rally. The S&P 500 retreated by 3.20%, with the Nasdaq slumping by 4.29%, and the Dow Jones losing 1.97%. No sector was spared, notably, and despite high inflation, cash is increasingly becoming King. The rot has stopped in Asia, with US futures attempting to claw back some of the overnight losses as the bottom-feeders come out to play. S&P 500 futures have risen by 0.60%, Nasdaq futures have jumped by 0.95%, and Dow futures have gained 0.45%.   In Asia, equity markets initially tumbled in response to the Wall Street moves, in a rerun of yesterday. However, the recovery by US futures this morning seems to have taken the edge of the sell-off, with Asian markets recouping some of their earlier losses. Japan’s Nikkei 225 is now down just 0.44%, with South Korea’s Kospi down 0.47%,   Meanwhile, after a tough session yesterday, the intraday rally in sentiment has pushed mainland China exchanges well into positive territory. The Shanghai Composite and CSI 300 have rallied by 1.0%. Hong Kong was pummelled earlier today but has also recovered somewhat, but it remains 2.25% lower for the day.   In regional markets, Singapore is still down by 1.20%, while Kuala Lumpur is unchanged, and Jakarta has slumped by 2.90% led by resource stocks. Taipei has retreated by 1.65%, while Manila is down 1.0% post-election, with Bangkok managing a 0.30% gain. Australian markets are also in retreat, the ASX 200 and All Ordinaries falling by 1.30%.   What makes the session odd is that markets with a high sensitivity to the China slowdown are the worst performing in Asia today, but mainland equities have rallied. The cynic in me suspects that China’s “national team” are busy today supporting the market, especially as covid-zero policies remain in force and nerves are rising around mainland property developers once again.   European markets will struggle to construct a bullish case today as well, also President Putin not declaring a was on Ukraine at yesterday’s May Day parades could be a straw to grasp. The question is really whether the bounce in US equity futures today is the start of a recovery or merely a corrective bounce to short-term oversold indicators. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The release of Chinese GDP, Bank of Canada interest rate decision and more - InstaForex talks the following week (part I)

Broad China Selloff Drags Down Alibaba, European Gas Prices Down, Goldman Sachs Aim To Increase Investment In China, Race For Next U.K PM

Rebecca Duthie Rebecca Duthie 24.10.2022 13:40
Summary: Alibaba stock tanks on Monday. Warmer weather prospects driving NGAS down. Goldman Sachs has established a new joint venture in China. Rishi Sunak on track to become the next U.K Prime Minister. Markets reacted to President Xi Jinping’s re-election As markets reacted to President Xi Jinping consolidating power following his historic confirmation to a third term as head of the second-largest economy in the world, shares of Chinese corporations were falling on Monday. Alibaba (ticker: BABA) lost 12% in premarket trade in the United States. Investors are spooked by President Xi Jinping's increasing control over China's ruling party as he begins a record-setting third term with no apparent successor. In addition, the 14th edition of the 11.11 Global Shopping Festival ("11.11" or "Festival"), which will feature more than 290,000 brands, was formally launched today by Alibaba Group Holding Limited. ⚠️BREAKING:*ALIBABA STOCK PLUNGES 11% IN HONG KONG AMID BROAD CHINA SELLOFF$BABA 🇨🇳🇭🇰 — (@Investingcom) October 24, 2022 European gas prices fall as supply prospects improve Following predictions of warmer-than-usual weather for the majority of the continent over the coming week, European natural gas futures fell once again during the opening hours of trading on Monday. Weather predictions that continental Europe will see temperatures this week that are between 4 and 8 degrees Celsius warmer than the seasonal norm, predicting reduced demand and enabling importers to continue injecting excess gas into storage, served as the primary impetus for the decision. ​​In order to relieve the pressure brought on by Russia's effective supply suspension, Europe has been able to fill its storage facilities ahead of schedule thanks to a mild start to the winter heating season and aggressive buying of liquefied natural gas on spot markets. EU storage facilities were 93.4% full as of Sunday, with the two largest markets on the continent, Germany and Italy, posting even higher levels. ⚠️BREAKING:*EUROPEAN GAS PRICES TUMBLE TO LOWEST SINCE JULY ON EASING SUPPLY FEARS 🇪🇺🇪🇺 — (@Investingcom) October 24, 2022 Goldman Sachs’ new joint venture In an effort to increase investment in Chinese logistics and infrastructure real estate assets, Goldman Sachs has established a joint venture in China with local logistics firm Sunjade, the U.S. bank announced on Monday. According to a company release, the bank is creating the new subsidiary through its investment arm Goldman Sachs Asset Management, which has made more than $50 billion in real estate-related investments worldwide. The stock structure or the amount of money committed to the platform were not disclosed. The joint venture has invested in a 240,000 square meter project with four institutional-grade warehouse assets in Shanghai and the surrounding region. The joint venture focuses on projects in China's first-tier cities and neighboring areas. The new platform, according to the U.S. bank, will profit from China's growing demand for brand-new, high-quality infrastructure assets, particularly institutional-quality storage space driven by e-commerce and the diversification of industrial requirements supported by government policies. Goldman Sachs launches Chinese infrastructure real estate joint venture — Reuters Business (@ReutersBiz) October 24, 2022 Rishi Sunak on track to be next U.K PM After Boris Johnson withdrew from the race on Sunday night and the markets breathed a sigh of relief, Rishi Sunak, a former chancellor, was on track to become the new prime minister of Britain on Monday. After the likelihood of further imminent political and economic unrest decreased, the value of the pound increased on Monday. Johnson, who was having trouble gaining support, acknowledged that due to divisions among Tory MPs, even if he had won, he could not have governed "effectively." If Penny Mordaunt, the leader of the Commons and his sole remaining competitor, is unable to secure the necessary 100 nominations from Tory MPs, Sunak will take over as the party's leader at 2 p.m. on Monday. Rishi Sunak’s priority should be to restore stability and the UK’s reputation — Financial Times (@FT) October 24, 2022 Sources:,,
The Japanese Yen Retreats as USD/JPY Gains Momentum

Korean KOSPI lost 0.29%, Shanghai Composite and Shenzen Composite went down too. ASX 200 decreased by over 1.5%

InstaForex Analysis InstaForex Analysis 03.11.2022 15:56
  Today, Asian indices declined by up to 3%. In general, they showed slight declines. The Korean KOSPI decreased by 0.29%, and the Chinese Shanghai Composite and Shenzhen Composite indices dropped by 0.63% and 0.59% respectively. The Australian S&P/ASX 200 and Hong Kong Hang Seng Index were among the top losers, plummeting by 1.77% and 2.9% respectively. Japan's stock exchanges are closed today because of the holiday but yesterday Japan's Nikkei 225 dropped by 0.06%. Asian indicators traditionally follow the US indices, which showed a decline of up to 3.3%. This was due to the release of the US Federal Reserve's decision to raise the rate by 0.75%, to 3.75-4%. Although the increase coincided with experts' forecasts, investors fear an economic downturn, as the rate reached a record high for 14 years. In addition, the Fed chairman's statement warned them that the central regulator had no plans to reduce the pace of rate hikes so far. Thus, the risk of a recession is getting higher but the Fed is going to continue its policy in order to bring inflation under control. Softer monetary policy, according to the head of the Fed, will be discussed either at the next meeting in December or as early as next year. According to the fresh data, China's PMI declined last month to 48.3 points from September's level of 48.5 points. If this indicator falls below 50 points, it indicates a decrease in business activity. Experts note that such a value was due to the country's strict policy against the spread of the coronavirus. Due to the fact that Lenovo Group managed to increase its net profit by 6% in the second quarter of the fiscal year, while its revenue decreased by 4%, its share price declined by 0.8%. CanSino Biologics, Inc.'s stock price plummeted by 26.5% after the company announced that it was not expected to increase profits from sales of China's first inhalation vaccine against coronavirus due to the high level of competition and an overall decline in demand. Following this statement, other representatives of the pharmaceutical industry also showed declines. Securities of CSPC Pharmaceutical Group, Ltd. fell by 10.1%, and Sino Biopharmaceutical, Ltd. dropped by 5.9%. Also among the components of the Hong Kong Hang Seng index, Netease, Inc. slipped by 6.7%, Sands China, Ltd. lost 6.1% as well as Alibaba Group Holding, Ltd. fell by 6%. Among the components of the Korean KOSPI, Samsung Electronics dropped by 0.8%, as well as Hyundai Motor lost 2.1%. The Australian S&P/ASX 200 index also showed declines. BHP lost 3.1% and Rio Tinto declined by 2.3%. Relevance up to 14:00 2022-11-04 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more:
The Bitcoin Price Movement Is In The Bullish Channel

Chinese stocks decreased as COVID situation worsens. Bitcoin struggles

Craig Erlam Craig Erlam 24.11.2022 16:25
Equity markets are making steady gains in Europe and Asia on Thursday, while Wall Street is closed for the Thanksgiving bank holiday. The day got off to a decent start as investors on this side of the pond played catch-up following the late rally in the US. All considered it hasn’t been the most lively of weeks but the FOMC minutes did ensure investors went into the Thanksgiving break on a bit of a high. A dovish boost before Thanksgiving The most notable takeaway from the minutes – which were never going to be game-changing – were the discrete references to the difference in support for slowing the pace of tightening now and those raising their estimates of the terminal rate. Clearly, the latter has much less support which means a lower rate hike is on the cards in December – probably 50 basis points – while a higher terminal rate is only a possibility and will depend on the data. While not ideal for investors, the net effect is undoubtedly less hawkish and that’s at least partly what drove that late rally. Read next: G7 work on a Russian oil price cap, gold has gained as dovish Fed signals spread through the market| FXMAG.COM Destructive lockdowns again for China? Record Covid cases in China, more testing and restrictions, and even possible lockdowns went some way towards undermining that positivity coming from the US in Asia on Thursday. Stocks in China slipped while Hong Kong underperformed its regional peers as investors weighed up the prospect of more growth-destructive lockdowns and uncertainty for the world’s second-largest economy. This comes as authorities sought to slightly ease the burden of Covid restrictions and support the property market, both of which are difficult if record case numbers force people indoors. Another disappointing manufacturing survey The plunge in Japan’s manufacturing PMI to a two-year low below 50 – which separates growth from contraction – perfectly highlights how challenging the current environment is around the world. Higher input costs combined with lower domestic and external demand is hammering the manufacturing sector and is likely to continue until inflation abates and growth bounces back. Navigating blind The Bank of Korea has become the latest central bank to jump aboard the “slower for longer” train, raising rates by 25 basis points while leaving the door wide open to further rates hikes. The decision to join the RBA and BoC, with the Fed likely not far behind, comes as the economic headwinds mount. The problem many now face is a result of acting late and aggressively. As rate moves come with a lag, policymakers are being forced to make decisions without full visibility of the impact recent moves have had. They must therefore decide when to slow the pace of tightening in order to avoid unnecessary economic hardship and deflation while inflation is still very high. It may work out in the end but there’s a big risk on both sides that it won’t. CBRT brings an end to its easing cycle I’m not sure that particular analogy works when describing the Turkish central bank. In this case, it’s more like driving a car in reverse while looking forwards in the hope you somehow make it home ok. The CBRT cut interest rates by another 150 basis points today, taking it back to 9% while declaring the end of its easing cycle. That comes as official inflation sits at 85.5% in October, despite various efforts to control the currency movements. A dead cat bounce? Bitcoin is in the green for a third day, albeit only just, as it continues to try and stabilize in the aftermath of the FTX collapse. The event was unsurprisingly a huge setback for the whole industry, both from a contagion perspective but also a reputational one. Traders are correctly now asking themselves who else is exposed, how big will the ripple effects be, and where else this kind of activity is taking place. In such an unregulated world, these fears are very real and could undermine faith in the crypto space for some time, further weighing on prices in the process. For a look at all of today’s economic events, check out our economic calendar: This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A "dovish" boost - MarketPulseMarketPulse
India’s Investing In Program For The Green Hydrogen Industry | Covid Situation In China Is Getting Serious

China stocks weighed down by COVID-19, shaky recession predictions, Goldman Sachs predictions for the U.S stock market

Rebecca Duthie Rebecca Duthie 28.11.2022 13:30
Summary: Since the start of the epidemic, China has struggled with its deadliest coronavirus outbreak. The argument that this recession will be "brief and shallow" risks complacency. The stock market had a poor year, and U.S. equities investors may not have much to look forward to in 2023. China’s latest COVID-19 outbreak Since the start of the epidemic, China has struggled with its deadliest coronavirus outbreak. Large-scale demonstrations have been provoked by the lockdowns Beijing ordered to stop the spread of disease. Market movements on Monday indicated escalating financial concerns due to political unpredictability. This past weekend saw protests start in a number of cities, including Beijing, Shanghai, and Wuhan. In Xinjiang, a fatal residential fire fueled protesters' rage against the government's policies. Party officials have been hesitant to import large quantities of foreign vaccines that are superior to the domestically produced Sinovac jab. Instead, they have turned to strict lockdowns. The effect on china’s stock market The commodities markets were initially affected by public unrest. Copper, iron ore, crude oil, and coal prices all increased last week's severe declines. This indicated a decline in demand from China, the biggest importer in the globe. Local stocks experienced a steep dip in early trading before partially recovering. The few equities that did increase made the situation even worse. One of the largest manufacturers of ventilators and oxygen inhalers, Jiangsu Yuyue Medical Equipment, increased by more than 5% on Monday, adding to gains of more than 50% over the previous six months. That was a reflection of the high infection rates and the anticipated demand for numerous additional hospital beds and intensive care units. Performance deviates from fundamentals when unpredictably political decisions are made in stock markets. Then, investors should hold off on adding more money and think about selling. That category has included Chinese tech firms for a while. Whether the Chinese market as a whole is becoming uninvestable is the current question. China: stocks becoming uninvestable amid lockdowns and protests | opinion — Financial Times (@FT) November 28, 2022 Recession complacency You would think that consensus forecasters would be more flexible in how they define the US recession they expect to occur in 2023 after the chastening delivered by last year's temporary inflation call. However, they assert with assurance that this recession will be "brief and shallow" and urge us once more to "see through" a significant development. There are concerns that this could be a repetition of the cognitive and behavioral fallacies that were present in the disastrous inflation call made last year, the effects of which we are still dealing with. The populace as a whole does not necessarily agree with what is true for the economy as a whole. The most vulnerable individuals and businesses have already depleted their funds, have fewer possibilities for employment and less access to low-cost financing. They have a negative influence on growth that is difficult for the wealthy to make up for. While inflation will decline over the coming months, rate stickiness of around 4% is likely to continue. There are numerous causes for this, including changes in wages, the evolving nature of globalization, the long-term effects of rewiring supply chains, and the energy transition. The consensus forecast on recession risks complacency — Financial Times (@FT) November 28, 2022 US Stocks as predicted by Golman Sachs The stock market had a poor year, and U.S. equities investors may not have much to look forward to in 2023, according to Goldman Sachs strategists. The analysts described a scenario in which there will likely be no change in the benchmark S&P 500 next year due to little earnings growth in Corporate America. The top investment bank on Wall Street forecasts that S&P 500 earnings per share will remain steady in 2023 at $224 and that the index will close the year at 4,000. The S&P 500's closing price on Friday was 4,026.12. The index's three-month target from Goldman is 3,600, down about 10% from where it was as of Friday's close, and its six-month target is somewhere around 3,900, down about 3%. The firm's ideal situation is for there to be no stock market gain. The S&P 500 could experience a "hard landing" in 2023 and drop to 3,150 in early '23, a 20% decline from current levels, if the Fed's interest rate hikes cause a sharp decline in the U.S. economy. Goldman Sachs sees stocks enduring 'less pain but also no gain' in 2023 by @alexandraandnyc — Yahoo Finance (@YahooFinance) November 28, 2022 Sources:,,
Asia week ahead: Policy meetings in China and the Philippines

Chinese stocks have performed well and the country's economy may be doing well for some time

Craig Erlam Craig Erlam 20.02.2023 16:00
Stock markets in Europe are treading water in thin trade at the start of the week amid a light economic calendar and a US bank holiday. It was always likely to be a slow day under the circumstances and that’s exactly what it’s turning out to be. Stock markets remain in a surprisingly strong position despite the uncertain outlook and rising interest rate expectations due to stubborn inflation. While other areas of the market appear to have adopted a more defensive position, equity investors remain undeterred. It would appear it’s going to take a lot more than a few nasty economic releases to put a dent in their optimism. China optimism remains The outlier is once again China, where stocks have enjoyed a very good start to the week. That came despite one and five-year loan prime rates remaining unchanged, as was widely expected following last week’s MLF hold. The bullish case for the Chinese economy remains solid and the likely release of stimulus over the next couple of months as it gathers pace could super-charge that. Domestic demand is going to be the cornerstone of the economic revival and policymakers appear poised to unleash that to its full potential. How they plan to do so should become clearer over the next month although we’ve already seen big steps in the right direction. Read next: Despite the rise in interest rates, we’ve seen over the past few months, the US economy has held up reasonably well, with strong growth in Q3 as well as Q4| FXMAG.COM Eternal optimism Cryptos are seemingly existing in a world of their own with bitcoin rising 2% again on Monday and eyeing the highs of the last week once more. This could be a really pivotal level for bitcoin and a break of it could generate plenty more enthusiasm. And we’ve all seen what happens when enthusiasm and euphoria exist in cryptos. The price can take off regardless of fundamentals or broader sentiment. That isn’t to say we’ll necessarily see that on this occasion but the 50% recovery so far this year does suggest something may be happening. For a look at all of today’s economic events, check out our economic calendar: This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Treading water - MarketPulseMarketPulse
UK Jobs Report Strengthens Case for June Rate Hike and Signals Caution on Rate Cuts

PBoC lack of further liquidity-pumping measures is said to be the one of the reasons which have reinforced the recent round of profit taking in, e.g. CSI 300 and A50

Kelvin Wong Kelvin Wong 24.04.2023 09:58
Cyclical sectors have underperformed, and Real Estate is the worst. No clear signs to indicate the resurgence of a major bearish trend. China A50 is at risk of further downside pressure to retest key support at 12,300. China’s stock market has started to show signs of fatigue after a magnificent three-month rally of 22% from the October 2022 low to January 2023 high as seen on its benchmark CSI 300 Index. Since 18 April 2023, it has declined by close to -4% and underperformed a basket of developed nations’ stock markets. The recent bullish up move from the October 2022 low of 3,495 in the CSI 300 has been fueled by optimism from the removal of prior Covid-zero lockdown measures, the introduction of stimulus measures to boost domestic consumption and reduce the credit crunch faced by embattled property developers as well as the toned down of draconian regulatory measures imposed on Chinese technology platform firms. Cyclical sectors are the worst performers with Real Estate at the bottom Source: TradingView as of 24 Apr 2023 (click to enlarge charts) As seen from the charts above, cyclical sectors such as Materials, Financials, Industrials, Consumer Discretionary, and Real Estate have underperformed against the benchmark CSI 300; the worst is the Real Estate which recorded a three-month rolling performance of -13.40% versus -5.90% recorded in the CSI 300. Meanwhile, two defensive sectors; Telecommunication Services and Utilities together with Energy and Information Technology have managed to outperform with positive gains of 22.70%, 3.60%, 11.80%, and 9.90% respectively over the same period. It’s all about liquidity and investors’ positioning The latest slew of robust economic data; China’s Q1 GDP, industrial output, and consumer spending for March coupled with a rebound in new home prices over the same period that recorded its fastest pace of recovery in 21 months on a month-on-month basis; a 0.5% increase in March from a 0.3% rise in February has allowed China’s policymakers some breathing space to a adopt a “wait and see” approach. Hence, China’s central bank, PBoC is likely in a no hurry mode to further loosen its liquidity taps to stimulate economic growth at this juncture. The latest monetary policy action of PBoC has shown evidence of such a “controlled accommodating” stance where it has left the key one-year medium-term lending facility interest rate (MLF), that is PBoC’s lending rate to big commercial banks unchanged at 2.75% for the fifth consecutive month. In addition, it injected the least amount of medium-term cash into the banking system; a 20-billion-yuan net injection via the MLF facility in April, the smallest amount since November 2022. Also, it left its other benchmark interest rates; the one and five-year loan prime rates unchanged at 3.65% and 4.3% respectively for eight consecutive months. Read next: IG analyst to FXMAG.COM: In my opinion commodity prices already reflect higher oil prices| FXMAG.COM To put a halt to the credit crunch problem that resurfaced in 2021 for property developers and prevent contagion and systemic risk outbursts in the domestic financial system, Chinese policymakers have allowed indebted property developers easier access to the onshore corporate bond market for fundraising with a slew of regulatory easing measures introduced in 2022. One of them was the full guarantees for property developers’ issued bonds backed by the state-owned China Bond Insurance Company. However, this key guaranteed initiative has started to lose its fanfare, property developers have managed to raise only 5.9 billion yuan of guaranteed onshore corporate bonds; down by -29% from 8.3 billion yuan recorded in December 2022. Interestingly, some of China’s top-performing hedge funds such as Shanghai Bulls Asset Management and Shanghai Silver Leaf Investment have exited from their lucrative bets on high-yield property bonds that reaped more than 100% returns in 2022 as per reported by Bloomberg News. Hence, a lack of further liquidity-pumping measures from PBoC and dwindling optimism in the Chinese property developers have reinforced the recent round of profit-taking activities seen in the various China benchmark stock indices such as the CSI 300 and FTSE China A50. Is it the start of another major bear market for China equities? Right now, it is still too early to put an “all-out” warning that we are witnessing the start of another major bearish trend phase to breach below the October 2022 low of the mainland benchmark stock indices as recent economic data as per mentioned earlier are indicating a recovery stage and inter-market analysis via a potential further weakening of the US dollar in the medium-term tends to support the China stock market. The next key economic data to watch to have a clearer picture of the crystal ball is the release of the official NBS Manufacturing and Non-Manufacturing PMIs for April on Sunday, 30 April 2023. Forecasts are expecting a continuation of manufacturing growth to 52 from 51.9 printed in March; likewise, for the non-manufacturing activities where it is expected to increase to 58.3 in April from 58.2 in March, and if it turns out as expected, it will be the fourth consecutive month of expansion. Also, consumer spending data during the upcoming Golden Week holiday for the Labour Day celebrations that kickstarts on 29 April to 3 May to have the latest gauge on consumers’ optimism and spending power. The main inherent risk is geopolitical where the relationship between US and China is still frosty. The US-China High Tech war is still “alive” since 2018, the Biden administration is set to unveil new investment curbs on China in the next upcoming G-7 meeting in May for endorsement. These new measures cover the fields of semiconductors, artificial intelligence, and quantum computing that limit investments from US firms, including venture capital and joint ventures. China A50 Technical Analysis – at the risk of short-term bearish pressure to retest a key support Source: TradingView as of 24 Apr 2023 (click to enlarge chart) Since its 27 January 2023 swing high of 14,437, the China A50 Index (a proxy for the FTSE China A50 futures) has declined by -11% and evolved into a short-term bearish trend with an intermediate resistance at 13,470. Downside momentum remains intact as indicated by the daily RSI oscillator where it has just staged a bearish breakdown below a former corresponding ascending support at the 44% level and has the potential to inch lower before it reaches the oversold region of less than 30%. If the 13,479 intermediate resistance is not surpassed to the upside, the Index may see the continuation of the short-term downtrend with support coming in at around 12,300, a medium-term pivotal level that also coincides with the former major descending resistance from the 27 May 2021 high. A point to note is that the Index is still evolving in a potential long-term bullish impending “Inverse Head & Shoulders” configuration since the 15 March 2022 low. Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc. Lack of further liquidity and investors’ positioning put a dent in China’s stock market optimism - MarketPulseMarketPulse
Assessing China's Economic Challenges: A Closer Look Beyond the Japanification Hypothesis"

Market Outlook: Indian Inflation Declines and Global Macro Developments Ahead of Fed Pause Decision

ING Economics ING Economics 12.06.2023 08:20
Asia Morning Bites 12 June 2023 Indian inflation later will show further declines. Markets are reasonably upbeat ahead of the likely Fed pause decision later this week.   Global macro and markets Global markets: US Stocks continued to push higher on Friday, seemingly finding comfort in the prospect of a pause from the Fed later this week, though markets are split over whether this will be the last hike this cycle, or whether there will be one more. The S&P 500 is now at levels it has not seen since last September. The NASDAQ is up 26.68% YTD – not bad for an economy that seems poised to slip into recession later this year….   Chinese stocks also made gains on Friday. Both the Hang Seng index and CSI 300 rose between 0.4-0.5%. US Treasury yields also pushed higher. Yields on the 2Y Treasury rose 8.1bp to 4.596%, while those on 10Y Treasury bonds rose just 2.1bp to 3.739%. EURUSD is pretty steady at 1.0749, though the AUD has pushed back up to 0.6745. Sterling is also stronger, rising to 1.2579 though the JPY is a little softer at 139.35. Asian FX is a bit mixed, with gains from the THB, and IDR, but further weakness from the CNY, which is now 7.13 following a month and a half of losses. G-7 macro: It is a quiet start to the week, though this won’t last. US CPI for May is out tomorrow, and we should see decent falls in the headline rate and some smaller declines in core inflation ahead of the FOMC decision, which comes out at 02:00 SGT on 15 June. China: Aggregate Finance data are released at some point this week, along with the usual monthly data dump on economic activity and MLF rates, which are out on 15 June – and there is some growing market speculation of a small rate cut. Regarding the activity data, we will be watching the retail sales figure, in particular, to see how the main engine of the recovery is doing. We expect it to slow from April as the post-re-opening spending bounce is not sustainable at current levels.   India: CPI data for May will show inflation falling further into the Reserve Bank of India’s (RBI’s) target range. We expect inflation to drop from 4.7% to 4.3%YoY (consensus 4.37%). Keep an eye out for the core inflation figures, which will be key for determining when the RBI may feel it can start thinking about winding back some of its tightening. For the moment, on-hold seems the more likely response. But the RBI won’t ignore a chance to give growth a chance if offered and may signal a more neutral stance at the next meeting on 10 August.     What to look out for: Japan PPI inflation and machine tool orders (12 June) India CPI inflation (12 June) Australia Westpac consumer confidence and NAB business confidence (13 June) US CPI inflation and NFIB small business optimism (13 June) South Korea unemployment (14 June) India Wholesale prices (14 June) Philippines OF remittances (14 June) US PPI inflation and MBA mortgage applications (14 June) FOMC policy meeting (15 June) New Zealand GDP (15 June) Japan core machine orders (15 June) Australia unemployment (15 June) China industrial production and retail sales (15 June) Indonesia trade (15 June) India trade (15 June) Taiwan policy meeting (15 June) ECB policy meeting (15 June) US retail sales and initial jobless claims (15June) Singapore NODX (16 June) BoJ policy meeting (16 June) US University of Michigan sentiment (16 June)
The Japanese Yen Retreats as USD/JPY Gains Momentum

Market Disappointment Despite Blinken-Xi Handshake: China's Loan Rates and RBA Minutes Awaited

ING Economics ING Economics 20.06.2023 07:27
Asia Morning Bites Blinken-Xi handshake fails to boost markets. RBA minutes and China's loan prime rate will be released this morning.   Global Macro and Markets Global markets: With the US off on vacation yesterday, there is no US equity market to track this morning in Asia time, though equity futures are not looking very positive and that may be the main directional steer in early trading today. Chinese stocks reversed course yesterday and dropped. The Hang Seng was down 0.64%, while the CSI 300 fell 0.82%. In the absence of any US Treasury news, European bond yields drifted higher. The 10Y Bund yield rose 4.3bp to 2.513%. 10Y Gilt yields rose 7.9bp to 4.483% ahead of this week’s expected Bank of England rate hike. EURUSD edged lower yesterday and is 1.0922 currently. G-10 currencies were also softer against the USD, though the JPY was steady at 141.94. Most Asian currencies were also softer against the USD. The CNY pushed back up to 7.1635, while the KRW, the region’s worst-performing currency on the day, rose to 1281.86.   G-7 macro:  Downbeat markets occurred despite a Blinken-Xi handshake, which had been viewed as an indication of successful talks on winding down US-China tensions. The talks are thought to lay the groundwork for a Biden-Xi summit later this year. It is another quiet day for Macro today.  Besides US housing starts and permit data for May, we have German PPI data and not a lot else. We have a few Fed speakers today (Bullard, Williams) before the main act tomorrow when Jerome Powell starts his testimony to Congress.   China:  After the recent cuts in the 7-day reverse repo rate and the 1Y MLF rate, loan prime rates (LPR) will almost certainly be cut today. The 1Y loan prime rate should also fall 10bp to 3.55%. The 5Y LPR is thought likely to fall 15bp to 4.15%.   Australia:  The minutes from the Reserve Bank of Australia’s (RBA) last meeting, where they surprised markets with a 25bp hike, are released this morning. Any hint as to what to expect at the July meeting would be welcome following a period where communication has not been particularly effective. Clarity is unlikely though.    What to look out for: China loan prime rate, RBA minutes plus Fed speakers China 1 and 5-year loan prime rate (20 June) Australia RBA minutes (20 June) Japan industrial production F (20 June) Taiwan export orders (20 June) US building permits and housing starts (20 June) Fed’s Bullard and Williams speak (20 June) South Korea PPI (21 June) Australia Westpac leading index (21 June) US MBA mortgage applications (21 June) Fed’s Powell speaks (21 June) Fed’s Goolsbee speaks (21 June) Philippines BSP policy meeting (22 June) Indonesia BI policy meeting (22 June) US initial jobless claims (22 June) Fed’s Waller, Bowman and Mester speak (22 June) Japan CPI inflation and Jibun PMI (23 June) Singapore CPI inflation (23 June) Thailand trade balance (23 June) Fed’s Barkin and Bullard speak (23 June)
Oil Prices Find Stability within New Range Amid Market Factors

Asia Morning Bites: Korean Trade Data, Powell's Testimony, and Global Market Trends"

ING Economics ING Economics 21.06.2023 08:29
Asia Morning Bites Early Korean Trade data showed a surprise gain in June, and a separate release also shows pipeline price pressures diminishing. Jerome Powell starts his 2-day testimony to the US Congress.   Global Macro and Markets Global markets: US stocks returned from vacation to resume their decline, though didn’t fall much and firmed up a bit after opening lower. The NASDAQ fell just 0.16% and the S&P 500 lost 0.47% on the day. Equity futures remain negative though, so more declines beckon today. Chinese stocks also fell. The CSI 300 was also only slightly down but the Hang Seng index fell 1.54%. US Treasury yields declined slightly too. The yield on the 2Y note fell 2.9bp to 4.685%, while 10Y yields fell 4.1bp to 3.721%.   EURUSD is almost unchanged from this time yesterday at about 1.0922, after testing both higher and lower. The AUD is lower though, falling to 0.6788. GBP is also a bit weaker ahead of this week’s Bank of England rate hike. But the JPY has rallied a bit, moving to 141.308, down from a high of 142.251 yesterday. The PHP also made some gains yesterday, though most of the Asian pack made slight losses against the USD yesterday. The TWD and CNY were both down about 0.25-0.3%. USDCNY is now 7.1809. G-7 macro: US housing starts and permits jumped strongly in May. The annualized rate of starts jumped from 1340 thousand to 1631 thousand. And permits were also stronger, suggesting more gains in the pipeline.   There isn’t much else on the macro calendar today, apart from Jerome Powell who will testify in front of Congress today for the start of his 2-day grilling. So expect plenty of headlines from that, although we doubt he will stray too far from the June FOMC comments. There’s also a fairly packed ECB schedule of speakers today to provide a variety of views on how high terminal rates for the Eurozone will be, and just as importantly, when they will reach that point. South Korea: Early June exports (1-20 days) rebounded 5.3%YoY – the first gain in ten months. As expected, chip exports (-23.5%) and exports to China (-12.5%) were particularly weak while exports to the US rose firmly (18.4%), probably due to robust auto exports. Korea’s exports have bottomed out from the fourth quarter of last year, but the recovery has been pretty shallow. Imports dropped -11.2% during the period on the back of falling global commodity prices. We believe that the trade balance will return to a surplus by the end of the third quarter. Meanwhile, price pressures continue to diminish as producer price inflation decelerated to 0.6%YoY in May from 1.6% in April. PPI declined 0.3% MoM (nsa) after a 0.1% drop in April. This morning, the government announced that there would be no electricity fee hike for the third quarter. As we argued earlier, ahead of the national election in April next year, it is likely that electricity rates will be held steady. As global commodity prices have fallen sharply, this would also support the freezing of electricity fees.   We look for consumer price inflation to reach the 2%-3% range from June We forecast a 2.7% YoY rate for inflation in June (vs 3.3% in May) and for inflation to stay in this range until the end of this year. Pipeline prices suggest price declines continue due to falling global commodity prices and recent KRW appreciation. Import prices have already dropped for three months in a row and producer prices are expected to fall in YoY terms from June. Thus, we believe that the Bank of Korea will take a pause on hiking in 3Q24. Currently, we have marked a rate cut in 4Q23, but depending on the Fed’s rate cut timing, the BoK’s cut may come later, perhaps in the first quarter of next year. But, for now, we are keeping our current BoK forecast as it is.   What to look out for: Powell's testimony before US congress South Korea PPI (21 June) Australia Westpac leading index (21 June) US MBA mortgage applications (21 June) Fed’s Powell speaks (21 June) Fed’s Goolsbee speaks (21 June) Philippines BSP policy meeting (22 June) Indonesia BI policy meeting (22 June) US initial jobless claims (22 June) Fed’s Waller, Bowman and Mester speak (22 June) Japan CPI inflation and Jibun PMI (23 June) Singapore CPI inflation (23 June) Thailand trade balance (23 June) Fed’s Barkin and Bullard speak (23 June)
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Asia Morning Bites: China PMI Report Indicates Slowdown in Non-Manufacturing Sector Growth; US GDP Revision Spurs Surge in Bond Yields

ING Economics ING Economics 30.06.2023 09:36
Asia Morning Bites China's PMI report could show non-manufacturing sector growth slowing. US GDP revision causes bond yields to surge.   Global Macro and Markets Global markets:  US Treasuries did not like the upward revision to the US 1Q23 GDP figures. 2Y yields soared by 14.9bp to 4.859%, and 10Y yields rose an equally eye-popping 13.1bp to 3.838%. Markets are now pricing in an 83.5% chance of a 25bp rate hike in July, though they seem to think that might be it, with only about a 36% chance of a subsequent hike after that. Equities weren’t quite sure which way to turn. Stronger growth – good. Higher rates – bad. The S&P 500 rose 0.45% while the NASDAQ remained unchanged at the close. Chinese stocks fell. The Heng Seng Index fell 1.24%, while the CSI 300 dropped 0.49%. The USD showed no signs of weakening yesterday, given the support from rising yields. EURUSD has fallen to 1.0866. The AUD is back down to the low 66-cent range. Cable drifted slightly lower to 1.2612 and the JPY resumed its ascent, rising to 144.777. Asian currencies were mostly weaker against the USD. The CNY was only fractionally higher at 7.2475, aided by another stronger-than-expected daily fixing. The KRW has moved up to 1317.   G-7 macro: Yesterday’s third revision to the 1Q23 GDP numbers should not have been a market-moving event. But the scale of the revision higher, from 1.3% to 2.0% will be taken by some to mean that the Fed still has a lot of work to do. Today, we get the May personal income and spending figures, together with their associated price indices. The market consensus expects headline PCE inflation to fall from 4.4% to 3.8%YoY, but the core deflator to stay at 4.7%. Final June University of Michigan confidence figures are also released.  In the Eurozone, May inflation data could shed some light on the ECB’s next moves. There is a growing divergence in the path of inflation across the region, which is leading to some disagreement about the right path for policy. Though one suspects that the response will be, if in doubt, hike.   China: Official PMI data out this morning will likely show the manufacturing sector remaining in modest contraction, but could show non-manufacturing sector growth slowing as pent-up demand works its way through the system and more normal spending levels return.   Japan: IP output was weaker than expected, declining by 1.6% MoM, sa (vs 0.7% in April, -1.0% maket consensus), recording the first decline in four months. Motor vehicle production fell unexpectedly. But, the survey of production forecast shows that production is expected to rise in June by 5.6%. Consequently, we interpret today’s weak data as a temporary drop and expect the underlying growth trend to continue.   Tokyo consumer inflation unexpectedly slowed to 3.1% YoY in June (vs 3.2% in May, 3.4% market expectation), mainly due to base effects. In a monthly comparison, inflation rose 0.2% MoM sa, reversing May’s 0.1% decline. Details showed that inflationary pressure mainly increased in commodity prices (0.4%) while service prices (0.0%) remained little changed. This month's electricity bill hike was the main reason for the monthly rise. Meanwhile, the labour market remained relatively tight, with the jobless rate staying at 2.6%. Today’s data from Japan signals that the BoJ will continue to be patient on policy making.   South Korea: Monthly activity data was surprisingly strong, with rising industrial production (3.2% MoM sa), retail sales (0.4%), and investment (equipment 3.5%, construction 0.5%). The decline in service activity (-0.1%) for the third month shows that the service-led growth trend is fading. Based on today’s better-than-expected activity data, we will revise our 2Q23 GDP forecasts higher. But, at the same time, forward-looking data, such as machinery orders (-11.7% YoY) and construction orders (-27.8% YoY), weakened further and soft service activity in accommodation and restaurants suggest weaker consumption and investment in 2H23. Thus, we are going to downgrade the 2H23 growth forecasts.   In manufacturing activity data, the upside surprise mainly came from semiconductors, which rose by 4.4%, which is quite puzzling, as it contrasts with major chipmakers' commitments to cut production. It usually takes 6 months to reduce production, thus the production cut is not fully reflected in the May output figures. Also, the recent strong demand for AI chips may have had some positive impact.   What to look out for: China PMI South Korea industrial production (30 June) Japan labour market data (30 June) China PMI manufacturing (30 June) US personal spending and Univ of Michigan sentiment (30 June)
Asia Morning Bites: Focus on Regional PMI Figures, China's Caixin Manufacturing Report, and Upcoming FOMC Minutes and US Non-Farm Payrolls"

Asia Morning Bites: Focus on Regional PMI Figures, China's Caixin Manufacturing Report, and Upcoming FOMC Minutes and US Non-Farm Payrolls"

ING Economics ING Economics 03.07.2023 08:56
Asia Morning Bites Market attention today will be on regional PMI figures and China's Caixin manufacturing report. Later in the week, the focus will shift to the FOMC minutes and US non-farm payrolls.   Global Macro and Markets Global markets:  US stocks finished last week on a positive footing, with both the S&P 500 and NASDAQ rising more than a per cent. That was a better performance than Chinese stocks. The CSI 300 did rise about half a per cent on Friday, but the Hang Seng was roughly unchanged. Tomorrow is the 4th of July, so the US will be out, and markets may be a bit thin ahead of the holiday. US Treasury yields nosed higher again on Friday. The 2Y UST yield rose 3.6bp to 4.895%, while the yield on the 10Y actually edged down 0.2bp to 3.837%. EURUSD staged an abrupt turn on Friday, rising back above 1.09 and it sits just above that level currently. The AUD has also made gains, rising to 0.666 ahead of tomorrow's RBA decision (we think no change, but the consensus is split), as has Cable, which is up to 1.2698. The Yen briefly went above 145 on Friday but with concern about intervention, it came down to 144.3 and traded in the narrow range. From previous years’ experience, intervention could be imminent, but we should watch the pace of depreciation more closely than the actual level of the JPY.  If the yen depreciates by more than 2% within 1-2 business days, we think that could be a trigger for government intervention. Other Asian FX has also made some gains against the USD. The THB and PHP were the main gainers on Friday, while the TWD lagged the pack.   G-7 macro:  US data on Friday was a little softer than predicted. Personal spending was up just 0.1% MoM, and flat on the previous month in real terms. The core PCE deflator rose 0.3%MoM, in line with expectations, but the core PCE inflation rate came in a little softer on rounding, to 4.6%YoY, down from 4.7%. Core inflation in the Eurozone edged 0.1pp higher to 5.4%, though this wasn’t quite as bad as had been expected. To kick this week off, we have the US Manufacturing ISM survey. Forecasters expect the headline index to move to a slightly less negative reading of 47.2 after 46.9 last month.   China: Caixin releases PMI data today. The official PMI numbers last week showed manufacturing still struggling with a below-50 reading. But although the non-manufacturing survey index was still in the expansion zone above 50, it was lower than the previous month. The Caixin manufacturing PMI has been a little stronger than the official numbers and was still just above 50 last month. We think it will probably drift down to about the 50 level this month, in line with the consensus view.   Japan:  The latest Tankan survey showed that Japan’s economy stays on its recovery path and will likely accelerate in the third quarter. The Tankan survey for large firms (both manufacturing and non-manufacturing) rose in both the current conditions and outlook indices. The current condition for manufacturing advanced from 1 to 5 for the first rise since June 2021 with confidence rising in the auto and electronics sectors. The outlook index also advanced to 9, beating the market expectation of 4. Despite the weakening of global demand, solid domestic demand, strong auto-sector performance and improving profits due to the weak JPY all may have supported the improvement seen in the manufacturing indices. The service-sector index also improved as expected. More importantly, capital investment across large enterprises rose 13.4% YoY (vs 3.2% 1Q, 10.0% market consensus).  The Tankan survey is one of the most closely watched indicators by the Bank of Japan, and we think the BoJ will likely upgrade its growth outlook in its quarterly macro-outlook report.   South Korea:  The trade balance in June recorded a surplus for the first time in sixteen months mainly due to falling global commodity prices. Within the export side, transportation - autos and vessels - gained the most, but this was more than offset by a decline in chips and petroleum. By destination, exports to the US fell for a third month while exports to the Middle East rose solidly due to regional infrastructure investment projects.  Please see the link for more details. However, business surveys showed that the manufacturing sector recovery is not so promising. Today’s manufacturing PMI fell to 47.8 in June from 48.4 in May. Last week’s local business survey also retreated. Thus, we are cautious about the improvement in manufacturing and exports in the current quarter.   Indonesia:  Indonesia reports inflation numbers today.  We expect inflation to moderate further with the market consensus pointing to a 3.6% YoY increase in prices last June.  Despite the slowdown in inflation, BI may opt to extend their pause and keep rates at 5.75% in the near term to help support the IDR.     What to look out for: Regional PMI reports and US NFP Japan Tankan survey and Jibun PMI (3 July) Regional PMI reports (3 July) Australia building approvals (3 July) China Caixin PMI manufacturing (3 July) Indonesia CPI inflation (3 July) US ISM manufacturing (3 July) South Korea CPI inflation (4 July) Australia RBA meeting (4 July) Japan Jibun PMI services (5 July) Philippines CPI inflation (5 July) China Caixin PMI services (5 July) Thailand CPI inflation (5 July) Singapore retail sales (5 July) US factory orders and durable goods (5 July) FOMC minutes (6 July) Australia trade (6 July) Malaysia BNM meeting (6 July) Taiwan CPI inflation (6 July) US ADP employment, initial jobless claims, trade balance, ISM services (6 July) South Korea BOP balance (7 July) Taiwan trade (7 July) US NFP (7 July)
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Asia Morning Bites: Philippine Inflation and Singapore Retail Sales Awaited

ING Economics ING Economics 05.07.2023 08:17
Asia Morning Bites Philippine inflation and Singapore retail sales are all slated for release today.   Global Macro and Markets Global markets:  With the US on vacation yesterday, there wasn’t much going on in global markets. Chinese stocks made small gains, while European bourses were mostly in the red. Bond markets generally saw yields make small declines at the front end of the yield curve, but 10Y yields rose slightly except in the UK and Australia, where they dropped very slightly following the RBA’s (Reserve Bank of Australia) no-change rate decision. In currency space, EURUSD moved lower to 1.0881. The AUD dropped sharply after the RBA but recovered and ended slightly higher on the day at 0.6692. Cable also made gains, rising to just under 1.2740 before easing back down to 1.2714. The JPY made slight gains and is currently 144.47. Most of the Asia FX pack made gains against the USD, led by the KRW and THB. The CNY moved down to 7.2163 G-7 macro: A slight shrinkage in Germany’s trade balance yesterday was the main data from Tuesday. Here’s Carsten Brzeski’s take on the data. European Service sector and composite PMI numbers dominate the calendar today. The US releases final durable goods numbers and vehicle sales. Australia: The RBA left rates on hold at 4.1% yesterday, though signalled a willingness to hike again dependent on the flow of data. Our expectation is that the RBA will hold fire again in August, as we expect further downward progress in inflation, but that they will hike once more in September, as inflation progress at that point may be hampered by electricity price rises in July (data released later). We think (hope) that this will be the last hike in the current cycle.    Singapore:  Retail sales for May will be reported today.  Market consensus points to a modest 1.9%YoY gain.  Sales may have been supported by a resurgence of visitor arrivals, countering the likely negative fallout from still elevated inflation.  We can expect this trend of modest expansion to continue in the near term until inflation cools off further by the end of the year.     Philippines:  Inflation numbers will be released this morning. June inflation will likely slow down further from the 6.1%YoY expansion recorded in the previous month with consensus suggesting a slide to 5.5%YoY.  Moderating inflation will give newly minted Governor Remolona space to extend the BSP's recent pause and we could see the central bank on hold for at least the next couple of meetings.      What to look out for: Japan Jibun PMI services (5 July) Philippines CPI inflation (5 July) China Caixin PMI services (5 July) Thailand CPI inflation (5 July) Singapore retail sales (5 July) US factory orders and durable goods (5 July) FOMC minutes (6 July) Australia trade (6 July) Malaysia BNM meeting (6 July) Taiwan CPI inflation (6 July) US ADP employment, initial jobless claims, trade balance, ISM services (6 July) South Korea BOP balance (7 July) Taiwan trade (7 July) US NFP (7 July)
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Asia Morning Bites: Korean Authorities Limit Fallout as MGCCC Branches Close, US Non-Farm Payrolls in Focus

Michael Hewson Michael Hewson 07.07.2023 08:48
Asia Morning Bites Korean authorities give a strong deposit protection message to limit fallout as it closes some branches of MGCCC. US non-farm payrolls later - and a big number is expected following the ADP release.   Global Macro and Markets Global markets:  Strong US labour data ahead of today’s payrolls release caused US Treasury yields to move higher again yesterday. US 2Y yields rose a further 3.6bp while those on 10Y USTs rose 9.8bp taking them to 4.029% for the first time since early March. Equities didn’t respond well to the stronger-than-expected data. The S&P 500 fell 0.79%, while the NASDAQ dropped by 0.82%. Chinese stocks were also down. The Hang Seng fell 3.03%, while the CSI 300 fell a more modest 0.67%. In spite of the rise in yields, the USD lost a little ground to the EUR, and EURUSD moved up to 1.0894. The AUD was weaker though, falling back to 0.6630, while the GBP moved a little higher to 1.2743, and the JPY also made some gains, moving to just below 144. Most of the Asian FX pack was weaker against the USD yesterday G-7 macro: Yesterday’s market-moving release was the US ADP survey, which showed a 497 thousand increase in private employment in June. This was more than twice what had been expected and could set the market up for an upside surprise to the 230 thousand payrolls median forecast today. There was also a stronger-than-expected reading from the service sector ISM index, with both headline and employment indices rising a lot. It is going to be quite hard for the Fed to ignore these numbers at its 27 July meeting. As well as payrolls today, we also get hourly earnings data, which is expected to show a slight moderation from the 4.3% rate of annual growth in May. The unemployment rate, however, is thought likely to go down, not up. Korea: The risk of a bank run emerged suddenly as the delinquency rates of MGCCC rose sharply and a couple of branches decided to close. The government has issued a strong message that deposits will be protected. The BoK will keep rates on hold as financial market stress is expected to continue for a while. Please see details. Taiwan: Trade figures for June could show rates of decline moderating in year-on-year terms, though they are likely to remain in a double-digit descent. In USD terms, Taiwan’s exports have been steadily declining since August 2022, and today’s reading may simply signal that the rate of decline has eased slightly. This would be in line with what we see in other regional peers like South Korea.   What to look out for: US jobs report South Korea BOP balance (7 July) Taiwan trade (7 July) US non-farm payrolls (7 July)
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Asia Morning Bites: China's Inflation Report, Global Markets, and Upcoming Economic Indicators

ING Economics ING Economics 10.07.2023 10:44
Asia Morning Bites Monday features China's inflation report which should show both CPI and PPI reflecting weak demand.   Global Macro and Markets Global markets:  US equities didn’t much like Friday’s labour market report, though they didn’t hate it either. The S&P 500 fell 0.29% while the NASDAQ lost 0.13%. US equity futures are looking a little brighter currently. Chinese stocks also had a disappointing end to the week. The Hang Seng fell 0.9% while the CSI 300 dropped 0.44%. US Treasuries were also a little unsure how to react to the labour report. The yield on 2Y US Treasuries fell 3.5bp, but yields on the 10Y UST rose 3.2bp to 4.062%. The USD weakened against the EUR on Friday. EURUSD rose to 1.0964. Other G-10 currencies were also strong, including the JPY, which has tended to strike its own path recently. USDJPY has fallen to 142.22. Friday was a mixed day for the Asia FX pack. The CNH made some modest gains, falling to 7.2328, but most of the rest saw modest losses, which they may well recoup in early trading today. G-7 macro:  The US labour report on Friday showed some welcome signs of slowdown in hiring, especially after the much stronger than expected ADP survey earlier had increased anxiety about a much bigger number, but it was a very mixed story, with a falling unemployment rate, and sticky wages all indicating that the Fed will be hiking again in July. James Knightley provides more detail in this note. In terms of the numbers, non-farm payrolls rose 209 thousand, the unemployment rate declined from 3.7% to 3.6%, and average hourly wages growth was unchanged at 4.4% YoY. There isn’t much on the G-7 calendar of note today. China: PPI data for June will likely show a further deterioration from the -4.6% YoY May figure, weighed down by weak demand. Aggregate finance data is released this week, possibly as soon as today. We should see an increase over the May figure of CNY1362bn, but probably less than last year’s June number of CNY2806bn. The consensus estimate is about CNY2300bn.   What to look out for: China inflation China CPI inflation (10 July) Japan trade balance (10 July) US wholesale inventories (10 July) Australia Westpac consumer confidence and NAB business confidence (11 July) Philippine trade (11 July) South Korea unemployment (12 July) Japan PPI inflation (12 July) New Zealand RBNZ policy (12 July) India CPI inflation (12 July) US MBA mortgage application, CPI inflation (12 July) South Korea trade and BoK policy (13 July) China trade (13 July) US PPI inflation (13 July) Singapore GDP (14 July) Japan industrial production (14 July) India trade (14 July) US import prices and University of Michigan sentiment (14 July)
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Asia Morning Bites: Inflation Day Today - India and US"

ING Economics ING Economics 12.07.2023 08:24
Asia Morning Bites Inflation day today - India and US.   Global Macro and Markets Global markets:  There was green across the board yesterday in equity markets, though the gains were not massive. US stocks opened slightly up and were flattish for much of the session before a late spurt driven by household products, and other housing related stocks. For once, semiconductors took a back seat and lost a little ground on the day. Chinese stocks also made gains. The Hang Seng was up just under a per cent and the CSI 300 gained 0.65%. There wasn’t much movement in US Treasuries. 2Y yields rose by just 1.5bp while 10Y yields were 2.4bp lower at 3.97%. EURUSD is still above 1.10, though it hasn’t gone much further from this time yesterday and is currently at 1.1012 after pulling back from 1.1030 on the topside and failing to move lower convincingly through 1.0980. Cable was stronger, rising to 1.2936 on thoughts of a further 50bp hike in August after much stronger than expected wages figures (see below). And the JPY continued to make progress, moving down to just over 140.23. Asian FX made strong gains yesterday, closing the gap with their G-10 counterparts.  The KRW led the charge, gaining almost a full per cent taking it to 1293.70.  The THB and PHP also both made above average gains. G-7 macro:  The UK topped the billing for the main macro development on Tuesday, as much stronger than expected wages figures raised the prospects of yet another 50bp increase in rates at the August meeting. Wages in the UK are now running at more than 9% on a 3m annualized basis.  See James Smith’s note for more.    The US reported NFIB data, which rose slightly. Germany’s ZEW survey also made a small gain, though remains at very bombed out levels. Today, the US releases June CPI, which will show a solid fall to around 3.1% according to the consensus estimates, though there are some forecasters looking for it to push into the high 2’s.  The current inflation rate is 4.0% YoY. However, it is the core reading that will probably get just as much attention. A fall from 5.3% to 5.0% is forecast, and it would need to come in well below that for a July rate hike to look doubtful. We don’t think that will happen. India: At 8pm tonight (SGT/HKT) India releases its CPI inflation report for June. Inflation will likely remain well within the RBI’s 2-6% target range, though will likely rise slightly from May, as some seasonal food prices have ticked up over the last month. The current inflation rate is 4.35%, and the consensus forecast, with which we concur, is for a rise to 4.6% YoY. Japan:  Core machinery orders dropped unexpectedly -7.5% MoM in May (vs 5.5% in April, 1.0% market consensus), more than offsetting the previous month’s gain. The three-month sequential trend also declined, and as a result, we are a little concerned that Japan’s investment recovery may lose some steam in the coming quarters. Meanwhile, pipeline prices – producer prices (-0.2%) and import prices (-1.2% )- declined in June mainly due to soft commodity prices, which will likely feed through into an easing of consumer prices in the months ahead. South Korea: The jobless rate edged up to 2.6% in June (vs 2.5% in May, 2.6% market consensus). Job market conditions remains quite resilient, and this will support the BoK’s decision to hold rates unchanged tomorrow.  We saw a solid gain in manufacturing jobs (47K) while the service sector shed jobs across almost all industries. Construction jobs also dropped for the third month in a row. Although the manufacturing PMI and other manufacturing business surveys have remained in a contraction zone, we think manufacturing will improve as exports recover gradually in 2H23. However, the slowdown in construction and services will continue as domestic demand softens.   What to look out for: US inflation South Korea unemployment (12 July) Japan PPI inflation (12 July) New Zealand RBNZ policy (12 July) India CPI inflation (12 July) US MBA mortgage application, CPI inflation (12 July) South Korea trade and BoK policy (13 July) China trade (13 July) US PPI inflation (13 July) Singapore GDP (14 July) Japan industrial production (14 July) India trade (14 July) US import prices and University of Michigan sentiment (14 July)
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Global Markets React to Disinflationary Pressure as USD Weakens and Stocks Rally

ING Economics ING Economics 14.07.2023 08:24
Asia Morning Bites The RBA is to get a new Governor, Michelle Bullock, in September. In the US, James Bullard will step down from the St Louis Fed. More disinflationary pressure from June PPI data helps stocks to rally and the USD and US treasury yields to slide.   Global Macro and Markets Global markets:  Further disinflationary signs from US PPI data yesterday helped US Treasury yields to drop sharply. 2Y yields fell 11.6bp to 4.63%, while 10Y yields fell 9.4bp to 3.763%. This probably helped to spur further USD weakness. At 1.1224, it does really look as if the long-awaited USD turn has arrived. We haven’t seen levels like this since March 2022.  The AUD also made solid gains against the USD, rising to 0.6890. Cable too has surged, rising to 1.3131, and the JPY has plunged below 140 to 137.96. All Asian currencies were stronger against the USD yesterday, and it looks like a fair bet that this will be the theme in trading this morning. US stocks also seemed to like the additional disinflationary message from the PPI numbers. The NASDAQ rose 1.58% while the S&P500 rose 0.85%. Chinese stocks were also positive. The Hang Seng rose a very solid 2.6% while the CSI 300 rose 1.43%.   G-7 macro: US PPI rose just 0.1% MoM in June for both the headline and core measures. This resulted in a final demand PPI inflation rate of just 0.1%YoY, though the ex-food-and-energy PPI inflation rate was 2.4%YoY, down from 2.6% in the prior month. Initial jobless claims were a little lower though, so we shouldn’t get too carried away with the disinflationary theme.  Today, the US releases import and export price data, which should also indicate falling pipeline prices The University of Michigan confidence publication will also throw some light on inflation expectations, which are forecast to come down slightly on a 1Y horizon. There is May trade data out of the Eurozone. In Fed news, James Bullard, one of the FOMC hawks, and in this author’s view, one of the most thought-provoking and consensus-challenging members of the FOMC, is to step down to pursue a career in academia. Shame.  Meanwhile, Christopher Waller has said the Fed will need two more hikes to contain inflation because the negative impact of the banking turmoil earlier in the year has faded. Markets don’t agree.     Australia:  According to a Bloomberg article, the Reserve Bank of Australia’s Governor, Philip Lowe, will not be reappointed when his 7-year term ends on September 17. This may not come as a massive surprise following an independent review of the central bank, which criticized some of the RBA’s forward guidance on rates during Covid and the pace of the response to higher inflation. Lowe will be replaced by Michele Bullock, who is currently Deputy Governor.   China:  June FDI data is due anytime between now and 18 July. The last reading for May showed utilized FDI running almost flat from a year ago. Given the run of recent data, it is conceivable that we see a small negative number for June, indicating net FDI outflows.   India: Trade data took a sharply negative turn in May, and today’s June numbers, while likely to show exports still falling from a year ago, may have moderated slightly from the -10.3%YoY rate of decline in May. The trade deficit could shrink slightly from the May $22.12bn figure.     Singapore: 2Q GDP surprised on the upside and settled at 0.7%YoY compared to 1Q GDP growth of 0.4%YoY.  The Market consensus had estimated growth at 0.5%YoY. Compared to the previous quarter, GDP was up 0.3% after a 0.4% contraction in 1Q23. The upside surprise to growth may have been delivered by retail sales, with department store sales and recreational services supported by the return of visitor arrivals. Services industries as a whole expanded 3%YoY, much faster than the 1.8% gain reported in 1Q.  The rest of the economy, however, continues to face challenges with manufacturing down 7.5%YoY, tracking a similar downturn faced by non-oil domestic exports as global demand remains soft.    What to look out for: China FDI, India trade and US University of Michigan sentiment China FDI (14 July) Japan industrial production (14 July) India trade (14 July) US import prices and University of Michigan sentiment (14 July)
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Asian Markets Await Detailed Plans After Politburo Pledges Support for China's Economy

ING Economics ING Economics 25.07.2023 08:17
Asia Morning Bites Politburo pledges support for China's economy - we await detailed plans.   Global Macro and Markets Global markets:  US equity markets made small gains yesterday, though the price action was far from conclusive. The S&P settled 0.4% higher than the previous day while the NASDAQ rose just 0.19%. Chinese stocks fell. The Hang Seng was down 2.13% and the CSI 300 fell 0.44%. That might change today after a Chinese Politburo meeting yesterday vowed to provide more aid for the property sector as well as boost consumption and tackle local government debt issues. Equity futures are positive, but we will reserve judgement until we hear some details. We have had plenty of vague promises already, which don’t amount to a great deal so far. US Treasury yields seem to have decided that this week’s FOMC meeting will be hawkish, and 2Y yields jumped up 8.2bp to 4.919% yesterday. The yield on 10Y bonds rose just 3.8bp to 3.872%. EURUSD fell again yesterday, dropping to 1.1063. The AUD was flat at 0.6734, Cable dipped to 1.2816, and the JPY remained stable at 141.59. Asian FX didn’t move much yesterday. The TWD fell 0.39% after industrial production fell slightly more than expected. At the other end of the spectrum, the KRW made gains of 0.28%. The CNY was unchanged. G-7 macro:  PMI data yesterday was weaker across much of the Eurozone, and the aggregate composite PMI dropped a full point to 48.9, with very weak manufacturing (42.7 from 43.4) and a slowdown in service sector growth (51.5 from 53.7). The equivalent US series showed a smaller manufacturing contraction (49.0) but also showed service sector growth slowing (52.4 from 54.4). Today, Germany’s Ifo survey will add more detail on the German situation. The US releases house price data (S&P CoreLogic numbers as well as FHFA data). And the US Conference Board releases its July confidence data. South Korea: Korea’s real GDP rose 0.6% QoQ sa in 2Q23 (vs 0.3% in 1Q23, 0.5% market consensus). 2QGDP was up from the previous quarter and slightly higher than the market consensus, but the details were quite disappointing. Net exports contributed to the growth (+1.3pt) but it was mainly because the contraction of imports (-4.2%) was deeper than that of exports (-1.8%). Looking ahead, we think that GDP in 2H23 will slow down again, as forward-looking data for domestic demand indicates a further deterioration. Please see our 2H23 outlook details here.  We think today’s data should be a concern for the Bank of Korea as exports remain sluggish amid expectations of a further worsening of domestic growth. Also, this year’s fiscal support is likely to remain weak, considering the tax revenue deficit and normalization of covid related fiscal spending. Thus, the BoK’s policy focus will gradually shift from inflation to growth over the next few months as we expect inflation to stay in the 2% range most of the time in 2H23. Indonesia:  Bank Indonesia meets today to decide on policy.  BI is widely expected to keep rates untouched at 5.75% to help shore up the IDR and ensure FX stability.  Previous dovish comments from BI Governor Warjiyo suggesting rate cuts could be considered have been set aside for now and we could see an extended pause from BI with any rate cut only considered later on.     What to look out for: Central bank decisions Bank Indonesia policy meeting (25 July) Hong Kong trade (25 July) US Conference board consumer confidence (25 July) Australia CPI (26 July) Singapore industrial production (26 July) US new home sales (26 July) US FOMC decision (27 July) China industrial profits (27 July) ECB policy decision (27 July) US personal consumption, durable goods orders initial jobless claims (27 July) South Korea industrial production (28 July) Japan Tokyo CPI and BoJ policy (28 July) Australia PPI (28 July) US personal spending, core PCE, University of Michigan sentiment (28 July)
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Asia Morning Bites: Politburo's Economic Support and Global Market Analysis

ING Economics ING Economics 25.07.2023 08:20
Korea: 2Q23 GDP improved but with disappointing details South Korea’s real GDP accelerated to 0.6% QoQ (sa) in 2Q23 from 0.3% in 1Q23, which was slightly higher than the market consensus of 0.5%. However, the details were quite disappointing with exports, consumption, and investment all shrinking. We expect growth to slow in 2H23.   Net exports contributed positively to overall growth The upside surprise mainly came from a positive contribution from net exports (+1.3pt). However, we do not interpret this in a positive light, because it was not driven by an improvement in exports, but rather by a contraction of imports (-4.2%), which was deeper than that of exports (-1.8%). By major item, exports of vehicles and semiconductors rose as global supply conditions improved and global demand remained solid. But, exports of petroleum/chemicals and shipping services declined further with unfavourable price effects weighing. Falling commodity prices have had a positive impact on Korea's overall terms of trade, having a greater impact on imports, but "processed" exports such as petroleum/chemicals and shipping took more of a hit.   Net exports led growth but due to sharper decline of imports than exports   Meanwhile, domestic demand dragged down overall growth by -0.6pt As monthly activity and sentiment data already suggested, private consumption was down -0.1% with declining service consumption, while investment – both construction (-0.3%) and facilities (-0.2%) – contracted. Also, government expenditure dropped quite sharply (-1.9%) as spending on social security declined. We believe that the reopening boost effects on consumption have finally faded away, while tight credit conditions have also dampened investment. R&D investment (0.4%) was an exception, rising for the second consecutive quarter on the back of continued investment in new technologies.   GDP in 2H23 will likely decelerate again Forward-looking data on domestic demand indicates a further deterioration in domestic growth. Construction orders, permits, and starts have been declining for several months, while capital goods imports and machinery orders have also trended down recently. With continued market noise surrounding project financing and growing uncertainty over global demand conditions, business sentiment for new investment is very weak. This year’s fiscal spending will also not support the economy meaningfully, considering the tax revenue deficit and normalization of covid related spending. However, we think trade will take the lead in a modest recovery. We believe that exports will rebound by the end of the third quarter with support from improved vehicle demand, semiconductors, and machinery (despite the global headwinds). Please see our 2H23 outlook details here.   Korea's GDP is expected to slow down in 2H23     Although 2Q23 GDP was higher than expected, the details suggest a weaker-than-expected recovery in 2H23, together with weak forward-looking data, thus we keep our current annual GDP forecast for 2023 unchanged at 0.9% YoY.   The Bank of Korea watch We think today’s data should be a concern for the Bank of Korea (BoK). The BoK forecast growth to accelerate in 2H23 on the back of better exports. We agree that export conditions will improve, but we don't think they will be strong enough to dominate weak domestic growth, and today’s data also suggests that growth will slow down in the near future. Thus, the BoK’s policy focus will probably gradually shift from inflation to growth in 4Q23. In 3Q23, we believe that the BoK will continue to keep its hawkish stance while keeping a close eye on other major central banks’ monetary policies. Also, inflation may fluctuate a bit over the Summer season due to soaring fresh food prices amid continued severe weather conditions. However, if inflation stays in the 2% range for most of 2H23, then the BoK’s tone should shift to neutral and eventually revert to an easing cycle.
Eurozone Inflation Drops to 5.3% in July with Focus on Services

Asia Morning Bites: Australian Inflation Preview and Global Market Updates

ING Economics ING Economics 26.07.2023 08:05
Asia Morning Bites Australian inflation this morning is an appetizer ahead of tonight's FOMC main course.   Global Macro and Markets Global markets:  US stocks crept higher on Monday, though without much conviction. The S&P rose 0.28%, while the NASDAQ rose a further 0.61%. That leaves the NASDAQ up 35.14% ytd… Chinese stocks responded well to the supportive comments coming out of the Politburo yesterday. The Hang Seng index rose 4.1% and the CSI 300 rose 2.89%. However, we remain cautious about the economic outlook as the recent comments continue to lack detail despite the various “pledges” and “vows” to boost spending.  Ahead of today’s FOMC, which we in Asia will wake up to tomorrow morning, Treasuries were relatively quiet. 2Y yields rose 1.5bp to 4.874%, while 10Y UST yields rose just 1.2bp to 3.884%. EURUSD has drifted back down to 1.1051 on expectations of a hawkish Fed tonight. But the AUD gained ground yesterday, rising to 0.6788.  The GBP and JPY also strengthened against the USD ahead of Friday’s Bank of Japan meeting (see our latest note on this). The positive sentiment in China has enabled the CNY to strengthen to 7.1363 and the yuan was Asia’s best performing currency yesterday. Most other Asian currencies also gained against the USD. G-7 macro:  House prices in the US gained further ground in May, with both the FHFA and S&P CoreLogic measures of house prices rising more than expected.  There were also gains in the Conference Board’s consumer confidence indices. None of which plays into the “one and done” view that the market currently holds for the FOMC. Elsewhere, Germany’s Ifo survey presented more bad news, falling more than expected, though the UK’s CBI business survey was a little brighter. Today is quiet ahead of the Fed (02:00 SGT/HKT) with just US home sales and mortgage applications.   Australia:  CPI inflation for June should show further declines in inflation, with the headline rate declining to around 5.4% YoY from 5.6% currently. That would be a 3 percentage point decline from the December 2022 peak. Inflation should decline again next month. Thereafter, we will need to see month-on-month changes in inflation slow considerably to stop inflation from stabilizing at high levels or even backing higher again, as all the helpful base effects will have been used up until we get nearer to the end of the year. Singapore: Singapore reports industrial production figures for June.  We expect another month of contraction, extending the slump to 9 months of decline, tracking the downturn in non-oil domestic exports.  Industrial production should slip by 6%YoY and we can expect the slide to continue for as long as global demand stays subdued. 
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Asia Morning Bites: Fed's Impact on Global Markets, Focus on ECB and BoJ Decisions

ING Economics ING Economics 28.07.2023 08:24
Asia Morning Bites After the Fed, attention now shifts to the BoJ tomorrow and ECB later today.   Global Macro and Markets Global markets:  US equities didn’t hate Jerome Powell’s message last night at the FOMC following the latest 25bp rate hike. But they didn’t love it either. That probably suggests Powell got it about right in terms of the overall tone. (see our detailed note here). The door is left wide open for more hikes, the question is, will they actually deliver?   The S&P 500 was down just 0.02%, while the NASDAQ fell only 0.12%. Practically flat on the day. Chinese stocks were a bit more subdued also, maybe figuring that the earlier Politburo comments were more hot air than cold cash, and the CSI 300 drifted 0.21% lower, while the Hang Seng index fell 0.36%. US Treasury markets clearly felt that they were appropriately priced for the FOMC message, and 2Y yields came off just 2.3bp, while the 10Y dropped just 1.8bp to 3.867%. These slight yield reductions enabled the EUR to claw a little ground back against the USD, and EURUSD rose to 1.1083. Other G-10 currencies – GBP and  JPY made gains against the USD, though the AUD lost some ground after their June inflation figures, which on the whole, could have been better even though they did show inflation still dropping (see our note here for more detail). Asian FX had a mixed day. The CNY has begun to drift weaker again after its Politburo-induced strengthening earlier. But there were some positive outcomes from the THB and MYR. G-7 macro:  After the FOMC excitement, which turned out not to be so exciting after all, it’s the turn of the ECB today. Here’s a cheat sheet from our European economists, rates and FX strategists, who think that they may veer towards a more data-dependent strategy after this meeting, which could be viewed as a slightly dovish tilt and lead to a weaker EUR. On top of that, we also get Advance 2Q GDP from the US, with a consensus view of 1.8%QoQ annualized growth – only slightly down from 2.0% in 1Q23. Any upside surprise is likely to see bond yields pushing higher again. China: Industrial profits data for June will not likely buck the trend of other weak data. Industrial production growth remained weak in June, while producer price inflation turned more negative. So a  further dip from May’s -12.6%YoY outcome seems possible. What to look out for: ECB and BoJ China industrial profits (27 July) ECB policy decision (27 July) US personal consumption, durable goods orders initial jobless claims (27 July) South Korea industrial production (28 July) Japan Tokyo CPI and BoJ policy (28 July) Australia PPI (28 July) US personal spending, core PCE, University of Michigan sentiment (28 July)
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Asia Morning Bites: RBA Decision and China's Caixin PMI in Focus

ING Economics ING Economics 01.08.2023 10:12
Asia Morning Bites A finely balanced RBA decision as well as China's Caixin manufacturing PMI data are today's main events.   Global Macro and Markets Global markets: US stocks made feeble gains on Monday to close out July, but that still leaves stocks strongly up over the month, and indeed the prior month too. The S&P 500 is up 19.52% ytd, and the NASDAQ is up 37.07%.  Chinese stocks made firmer gains, helped by a further set of policies to help boost consumption. Once again though, the measures stopped short of direct stimulus, and instead, we have further "signals of support" and supply-side measures. The Hang Seng index rose 0.82%, while the CSI 300 rose 0.55%. US Treasury yields were almost unchanged on the day. 10Y JGBs were a little higher at 0.599%. EURUSD moved lower to 1.0998, though the AUD gained ahead of today’s RBA meeting, rising to 0.6718. The JPY was a little weaker at 142.379 while Cable was steady at 1.2835. There wasn’t much direction for most of the Asian FX pack yesterday, though the MYR gained more than a per cent against the USD moving to 4.507. The THB was softer ahead of tomorrow's BoT meeting. G-7 macro: Eurozone inflation data for July showed a small fall to 5.3% YoY from 5.5% for the headline index. But there was no decline in the core inflation rate, which remained at 5.5%YoY. Today is fairly quiet for macro releases, though we do get the US Manufacturing ISM for July, together with backwards-looking labour data for June from the JOLTS survey. Australia: A small majority of forecasters are expecting the Reserve Bank of Australia (RBA) to hike rates by 25bp today. We aren’t among them, believing that the need to hike will be more readily apparent in later months. With the RBA keen not to overdo the tightening, it seems unnecessary to hike today when in all likelihood the macro signals for hiking will look much stronger at the September meeting. India: The June fiscal deficit came in a lot higher than the initially reported INR1.48tr deficit for June 2022, coming in at INR2.41tr. There were some upward revisions to last year’s data, so relative to the revised figures of INR2.11tr the increase is not as startling. These numbers do need watching. Next month’s comparison is with a small surplus in 2022, so if the deficit numbers for July do not dip sharply, then the government’s 5.9% deficit target may be at risk. South Korea: The export contraction deepened again in July. Exports fell by 16.5% YoY (vs -6.0% in June, -15% market consensus). By export item, Semiconductor exports fell 34%, petroleum fell 42%, and chemicals also fell 25%. Unfavourable price effects dragged down the export performance of these items. Meanwhile, vehicle exports rose a robust 15% YoY.   Imports also fell sharply (-25.4% vs -11.7% in June, -25.0 market consensus) mainly due to falling global commodity prices (crude oil -46%, gas -61%, coal -46%). With a larger decline in imports than exports, the trade balance recorded a surplus for the second month. We believe that the trade balance will stay in surplus for most of the second half of the year, but exports will likely stay in the contraction zone for the current quarter. Korea's July manufacturing PMI rose to 49.4 from 47.8 in June, the highest reading since July 2022, but remains in the contraction zone where it has languished for thirteen consecutive months. With new orders and output rising, we believe that a modest recovery in manufacturing and exports can continue. We expect exports to turn positive in 4Q. Japan: Japan’s labour market remains tight, and this is an optimistic sign that sustainable wage growth may continue for some time. The unemployment rate edged down to 2.5% in June (vs 2.6% in May and market consensus), and labour participation also rose to 63.1% from 62.9% in May.  Although labour demand conditions weakened recently as the Job-to-application ratio continued to decline to 1.30 in June from the recent peak of 1.36 in December, we still think that the current level of labour demand is quite healthy. By industry, job offers for hospitality services such as hotels and restaurants rose, but those for manufacturing declined. We believe that Japan’s recovery will continue, mostly driven by the service sector. Indonesia:  July inflation is set for release today.  The market consensus points to a further moderation in headline inflation. July inflation is pegged to slip to 3.1%YoY from 3.5% as favourable base effects kick in.  Likewise, core inflation is set to cool further to 2.5%YoY from 2.6% in the previous month.  Despite slowing inflation, Bank Indonesia will likely remain on hold in the near term to help provide stability to the IDR which has been under pressure lately.      What to look out for: RBA decision and regional PMI New Zealand building permits (1 August) Japan labour market figures (1 August) South Korea trade balance (1 August) Indonesia CPI inflation (1 August) PMI regional reports (1 August) China Caixin PMI (1 August) Australia RBA (1 August) Hong Kong retail sales (1 August) US ISM manufacturing and JOLTS report (1 August) South Korea CPI inflation (2 August) Thailand BoT policy (2 August) US ADP jobs report (2 August) Japan Jibun PMI (3 August) Australia trade balance (3 August) China Caixin PMI services (3 August) UK BoE policy meeting (3 August) US initial jobless claims, factory orders, durable goods orders, ISM services (3 August) Philippines CPI inflation (4 August) Singapore retail sales (4 August) US non-farm payrolls (4 August)
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Asia Morning Bites: Mixed Payrolls Impact and Indonesian 2Q23 GDP Focus

ING Economics ING Economics 07.08.2023 08:40
Asia Morning Bites Asian Markets have yet to fully respond to Friday's mixed payrolls report. Indonesian 2Q23 GDP today.   Global Macro and Markets Global markets:  US equities dipped slightly on Friday after a mixed labour report that contained some hints that the US economy was slowing. The S&P 500 declined 0.53% and the NASDAQ fell 0.36%. Chinese stocks had a better end to the week. The Hang Seng rose 0.61% and the CSI 300 rose 0.39%. US Treasury yields retreated sharply on Friday. The 2Y yield dropped 11.7bp, and 10Y Treasury yields fell 14.1bp to 4.034%. The USD also softened against the EUR. EURUSD rose sharply to 1.104 intraday, before settling back to just over 1.10.  The AUD took a look above 0.66 but has also settled back to 0.6572. Cable rose to 1.2747, and the JPY dropped to 141.91. Asian FX was mostly weak against the USD on Friday but will likely recover lost ground in early trading today. The KRW and THB were the two weakest currencies on Friday. The KRW is now 1309.70. G-7 Macro: Friday’s labour report was very mixed, with the headline payroll numbers coming in a bit lower than expectations, but wages growth rising and the unemployment rate falling. James Knightley thinks this should keep the FOMC on hold at their September meeting.  Fed speakers last week gave conflicting messages. Bostic suggested that as the labour market was now slowing, the Fed did not need to hike any more  - a view that is in line with our house forecast. Bowman said that more hikes were likely. There is nothing of any note from the G-7 today. Later this week, we get July CPI inflation from the US, which could move slightly higher again from June’s 3.0% reading.  Core inflation is forecast to stay at 4.8%YoY. Indonesia:  2Q23 GDP is set for release today.  The market consensus points to a 5.0%YoY expansion for 2Q with consumption getting a lift from fading inflation.  Meanwhile, softer export growth, partly due to moderating global commodity prices likely capped growth momentum amidst slower global trade.  This would match the expansion reported in 1Q with growth on track to meet government expectations.  Bank Indonesia recently retained its growth outlook for 2023 at 4.5-5.3%YoY.   What to look out for: Fed speakers Thailand CPI inflation (7 August) Indonesia 2Q GDP (7 August) Fed’s Bowman and Bostic speak (7 August) South Korea BoP current account balance (8 August) Japan trade balance (8 August) Australia Westpac consumer confidence (8 August) China trade (8 August) Philippines trade (8 August) Taiwan trade (8 August) US trade balance (8 August) South Korea unemployment (9 August) China CPI inflation (9 August) Taiwan CPI inflation (9 August) US MBA mortgage application (9 August) Japan PPI inflation (10 August) Philippines GDP (10 August) RBI policy meeting (10 August) US initial jobless claims and CPI inflation (10 August) Singapore CPI inflation (11 August) Hong Kong GDP (11 August) US PPI inflation, University of Michigan sentiment (11 August)
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Asia Morning Bites: Chinese Stocks Navigate US Investment Ban, Philippines GDP Data Ahead

ING Economics ING Economics 10.08.2023 09:03
Asia Morning Bites Chinese stocks weather the latest US investment ban. Chinese lending data today and 2Q23 GDP from the Philippines.   Global Macro and Markets Global markets:  It was another day of slight falls for US stocks on Wednesday, though things could have gone either way until late trading when there was a final dip lower. The S&P 500 fell 0.7% while the NASDAQ fell 1.17%. Chinese stocks were mixed, which isn’t a bad result considering the inflation data which turned negative, and the new US ban on investment in Chinese technology. The Hang Seng fell 0.32%, while the CSI 300 fell 0.31%. US treasury bond yields were also mixed on Wednesday, the 2Y yield rose 5.7bp to 4.808%, though the 10Y yield fell 1.4bp to 4.008% after a good auction.  EURUSD recovered a little ground, rising to 1.0976, but failed to make it above 1.10. The AUD and GBP were both fairly flat relative to the previous day, though the JPY saw further losses, rising to 143.657. Asian FX was fairly rangebound yesterday too, with most registering small gains of less than a quarter of a percent. G-7 macro:  US CPI inflation data for July is due today, and we are likely to see something we haven’t seen for some time, namely, annual inflation rising. The good news is that this is mainly due to base effects, and the month-on-month gain in the CPI index is expected to be modest at 0.2%, which is broadly in line with the Fed’s target. The bad news is that this indicates that the going will be a lot heavier for inflation from now on, without those nice helpful base effects that dominated the second quarter. Core inflation is expected to drop only 0.1pp to 4.7%. China: Aggregate finance data is released today. New CNY loans are forecast to rise by CNY780bn, which puts it slightly ahead of last year’s CNY678bn figure. Given the recent disappointing macro data, there might be some downward surprises here, though loans have been one of the stronger parts of China’s data in recent months.   Philippines:  2Q GDP is set for release today.  Market consensus is at 6.0%YoY, a slowdown from the 6.4% reported in 1Q.  Elevated prices likely capped household spending while capital formation also probably slowed due to the lagged impact of previous monetary tightening. Government officials are targeting full-year growth of 6-7%YoY, although given various headwinds, we feel that growth may be headed for a slowdown for the rest of the year.  What to look out for: US inflation Philippines GDP (10 August) RBI policy meeting (10 August) US initial jobless claims and CPI inflation (10 August) Singapore CPI inflation (11 August) Hong Kong GDP (11 August) US PPI inflation, University of Michigan sentiment (11 August)
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Market Overview: Equity Sentiment, Global Macro Trends, and Upcoming Events

ING Economics ING Economics 16.08.2023 11:09
Global Macro and Markets Global markets:  Equity sentiment turned sour again on Tuesday. US stocks fell, with consumer finance and regional banks towards the bottom of the pile. The S&P 500 and NASDAQ both fell by more than 1.1% though equity futures suggest a positive open later today. Chinese stocks also fell, despite yesterday’s rate cuts, as activity data turned even worse.  The CSI 300 fell 0.24% while the Hang Seng fell 1.03%. US Treasury yields were mixed yesterday. The 2Y yield lost 1.5bp taking it to 4.952%, while the 10Y yield put on 2bp to 4.258%. With yields not doing much aside from intra-day volatility, EURUSD is roughly unchanged from this time yesterday at just over 1.09. The AUD is weaker though, falling to 0.6456, responding to the weaker-than-expected wage-price numbers for 2Q23. Cable is slightly stronger at 1.2701, but the JPY is very slightly softer at 145.63, despite yesterday’s bumper GDP release for 2Q23. Regional Asian FX is weaker across the board. USDCNY jumped higher to 7.2884 on the bad macro news. The THB and VND were the region’s worst performers yesterday, responding to the negative China data. G-7 macro:  Yesterday’s US Retail sales figure was much stronger than forecast. Headline sales for July rose 0.7% against expectations for a 0.3% MoM rise. The core (control) figure rose 1.0% MoM. Not even a hint of a slowdown here. There was, however, a much weaker US Empire Manufacturing survey and some softer housing data (existing home sales and NAHB housing index). Today, the US releases more housing data (housing starts, building permits and mortgage applications) as well as industrial production. Production is expected to grow 0.3% MoM, with the manufacturing component remaining flat from the previous month.  We also get EU GDP data for 2Q23 – a 0.3% QoQ increase is the consensus forecast. And after stronger wage data yesterday, the UK will publish July CPI inflation numbers.   China:  New home price data for July are due out shortly. Last month, prices fell by a very marginal 0.06%. If the decline begins to accelerate, it will feed back on weaker consumer confidence and weigh on already feeble retail sales growth. New Zealand: The RBNZ is not expected to raise rates when they meet today, though they are expected to keep up their hawkish rhetoric and signal that rates will remain restrictive until well into 2024, despite the macroeconomy’s worsening situation.   What to look out for: Fed minutes and RBNZ meeting New Zealand RBNZ policy (16 August) US building permits, housing starts and industrial production (16 August) US Fed minutes (17 August) Japan trade balance (17 August) Singapore NODX (17 August) Australia employment report (17 August) Philippines BSP policy (17 August) US initial jobless claims (17 August) Japan CPI inflation (18 August) Malaysia GDP (18 August) Taiwan GDP (18 August)
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Global Market Update: US Stocks Bounce, Yields Rise, and China's Data Awaited

ING Economics ING Economics 16.08.2023 11:52
Global Macro and Markets Global markets:  US stocks bounced on Monday, but that wasn’t because the interest rate environment improved, yields on US Treasuries continued their upward march. The yield on 2Y US Treasuries rose 7.2bp to 4.967%, not far off the effective Fed funds rate of 5.33%, which tells you all you need to know about the market’s expectations for rate cuts over the next two years (not much), while yields on the 10Y rose 3.9bp to 4.191%. The S&P 500 nonetheless managed to rise 0.57%, and the NASDAQ rose 1.05%. Chinese stocks in contrast had another bad day ahead of today’s activity data releases. The Hang Seng dropped 1.58%, while the CSI 300 fell 0.73%. Higher yields mean a stronger USD. The EURUSD has now fallen to 1.0905 and actually pushed below 1.09 yesterday. This has dragged down G-10 currencies. The AUD has fallen to 0.6488. Cable is down to 1.2682 and the JPY has pushed up to 145.52. Asian FX was all weaker against the USD, with the peso leading the pack. The PHP has risen to 56.810. The CNY has risen back to 7.2573, and although one of the best performers of the day, the INR briefly rose above 83 to the USD, before moving slightly below. This puts it at its weakest since October 2022, and slightly outside the range in which it has traded since that time. Is this time for an upwards break? That depends on whether the RBI thinks that maintaining this tight band is worth the cost in FX reserves.   G-7 macro:  Yesterday’s macro calendar was devoid of interest, but today we get more to consider. US advance retail sales for July are released, and the consensus expectation is for a relatively robust 0.4% MoM figure, with a stronger core series. This is in line with the market’s recent conversion to the soft-landing hypothesis and could see further rate cuts priced out of the curve for 2024/25. Elsewhere, we have UK labour data for July. Here, the attention may be on the weekly earnings data, which are expected to pick up into the mid-7% range. That won’t allow the Bank of England to let its inflation guard down. And in Germany, the ZEW survey is expected to remain very bombed out. China: Later this morning, we get the monthly data dump, where the general message is likely to be one of ongoing meagre growth. But while in the past, weak numbers may have spurred thoughts of a government stimulus package, hopes seem to be waning for the traditional fiscal response to economic weakness given the overhang of debt in the economy. China also decides on the rate for the 1Y Medium-term lending facility. No change is expected this month, with the consensus building behind a September cut.   Indonesia:  July trade figures are set for release today.  Both exports and imports are likely to remain in deep contraction with the overall trade balance set to dip to $2.6bn, down from $3.5bn.  Exports and imports will be lower for July given lower commodity prices compared to last year.  The narrowing trade surplus is a fading support for the IDR which is under pressure recently.  Government officials recently implemented a partial restriction for export earnings with exporters asked to keep a portion of earnings on shore.    What to look out for: US retail sales plus China data activity data China medium-term lending facility (15 August) Australia RBA minutes and wage price index (15 August) China industrial production and retail sales (15 August) Indonesia trade balance (15 August) Japan industrial production (15 August) US retail sales (15 August) New Zealand RBNZ policy (16 August) US building permits, housing starts and industrial production (16 August) Japan trade balance (17 August) Singapore NODX (17 August) Australia employment report (17 August) Philippines BSP policy (17 August) US initial jobless claims (17 August) Japan CPI inflation (18 August) Malaysia GDP (18 August) Taiwan GDP (18 August)
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Asia Morning Bites: Focus on Tug of War Between Markets and PBoC, PMI Reports Dominate Macro Data

ING Economics ING Economics 23.08.2023 09:58
Asia Morning Bites The tug of War between markets and the PBoC will remain a focus in Asia today. Macro data is dominated by PMI reports from major economies.   Global Macro and Markets Global markets:  Tuesday was a nothing-day for US stocks as we creep closer to the US Jackson Hole event. US stocks opened up but then slid for most of the session. Chinese stocks, in contrast, managed a rare day of gains. The Hang Seng index rose 0.95% while the CSI 300 rose 0.77%.  US Treasury yields were mixed. The 2Y yield rose to 5.046%, a gain of 4.5bp, though the 10Y yield edged slightly lower by 1.4bp to 4.324%. EURUSD dropped to 1.0847, which looks like a lagged move to respond to Monday’s US yield increases. The AUD pushed slightly higher though, rising to 0.6452, while Cable looked stronger for most of Tuesday before sliding in late trading to return to the 1.2730 area. The JPY looked a bit more solid and strengthened slightly to 145.79. The tug-of-war between markets and the PBoC continued on Tuesday. There was another very strong fix below 7.20 combined with higher funding costs for offshore yuan, though these have now normalized, raising the question of what today's PBoC strategy will be. But the CNY remains just below 7.30 at 7.294, a slight rise from this time yesterday. The THB was the region’s best-performing currency yesterday as the political soup cleared a little with the appointment of a Prime Minister. The KRW also made decent gains. At the other end of the pack, the VND lost about 0.5%  and the PHP was off 0.37%.   G-7 macro:  Yesterday’s macro calendar was devoid of any interest. But today, we have a plethora of PMI releases across the globe, as well as some new home sales data for the US.   Australia:  August PMI data shows the Australian economy slowing further. The service sector PMI, which fell below the breakeven 50-level in July, slid further in August, dropping to 46.7. There was also a slight decline in the manufacturing PMI too, which fell to 49.4 from 49.6, making it the sixth consecutive reading below 50. After the recent softness in labour data, we will have to consider whether to trim out the additional rate hike we still have pencilled in for later this year. We'll leave it for now, but it is looking less obvious.   Singapore:  Singapore reports July inflation today.  The consensus points to a sustained deceleration in inflation with the headline number expected to dip to 4.2%YoY from 4.5%.  Meanwhile, the core number is expected to slip to 3.8%YoY (from 4.0%).  Despite the moderation, inflation remains elevated and we expect the Monetary Authority of Singapore to take this into consideration ahead of its policy meeting in 4Q23.        What to look out for: Jackson hole conference South Korea business survey (23 August) Singapore CPI inflation (23 August) Japan machine tool orders (23 August) Taiwan industrial production (23 August) US new home sales MBA mortgage applications (23 August) South Korea PPI inflation and BoK policy meeting (24 August) Indonesia BI policy meeting (24 August) Hong Kong trade balance (24 August) US initial jobless claims and durable goods orders (24 August) Japan Tokyo CPI inflation (25 August) Malaysia CPI inflation (25 August) Singapore industrial production (25 August) US Univ of Michigan Sentiment (25 August) Jackson hole conference (25 August)
AUD: RBA Maintains Rates as New Governor Upholds Continuity

Asia Morning Bites: Tokyo Inflation Dips and Markets Await Powell's Jackson Hole Speech

ING Economics ING Economics 25.08.2023 09:03
Asia Morning Bites Tokyo inflation for August dips slightly on base effects. Asian markets await the outcome of Powell's Jackson Hole speech.   Global Macro and Markets Global markets:  Pre-speech nerves? US equities reversed Wednesday’s gains on Thursday. The S&P 500 dropped by 1.35% while the NASDAQ fell 1.87%. Equity futures are non-committal ahead of Powell’s speech today.  Chinese stocks put in a rare up-day on Thursday. The CSI 300 rose 0.73%, and the Hang Seng index rose 2.05%, though this may have been following the earlier US lead, and could reverse today. US Treasury yields moved a little higher yesterday after Wednesday’s large falls. The 2Y yield is back above 5% now at 5.023%, while the 10Y yield regained 4.5bp to reach 4.237%. That’s still about 13 bp off the recent high.  The increase in yields was enough to push the USD stronger against the G-10 currencies yesterday, and EURUSD is now down to 1.0799. The AUD reversed all of Wednesday’s gains falling to 0.6415, Cable has dropped below 1.26 and the JPY is back up again to just under 146. In Asia, the KRW benefited from the BoK’s hawkish pause, and has gapped down more than a per cent to 1322.35. The TWD was also among the gainers, moving down to 31.786. The VND was weaker again yesterday, rising to 24008 as it looks to recalibrate against the CNY against which it has appreciated this year. The CNY was roughly unchanged on the day at just under 7.28.   G-7 macro:  Today’s Powell speech will get a great deal of scrutiny and there has already been a lot written about what he will say, with the majority view being that he will tread a cautious path with respect to any further potential tightening, looking for confirmation from the totality of the data before committing to any additional hikes. Lots of comparisons to the Greenspan “risk management” era are being wheeled out. At the same time, the Fed pundits are also saying that he will not want to suggest that there is any pre-set path for easing. We will know soon enough how well markets take his comments. The fact that this speech is scripted, and there is no Q&A means that room for going "off-piste" is limited. Besides this, and all the other Fed speakers this weekend, the University of Michigan publishes its August consumer confidence and inflation expectations surveys. Sentiment has been picking up recently, while the inflation expectations numbers have eased back slightly. Yesterday’s data was mixed. Weaker durable goods figures but lower jobless claims.   Japan: Tokyo inflation eased to 2.9% YoY in August (vs 3.2% July, 3.0% market consensus) mainly due to base effects and lower energy prices. Utility prices dropped to -15.0%YoY from the previous month’s -10.8%. However, core inflation excluding fresh food and energy stayed at 4.0%YoY as expected for the second month, the highest level for decades. Demand side pressures are clearly building up, suggested by inflation increases in entertainment (5.7%), transport & communication (3.6%), and medical care (2.8%). On a monthly comparison, goods prices dropped -0.1% MoM sa while services prices stayed flat. Also, higher than expected PPI services inflation (1.7% YoY in July vs revised 1.4% June, 1.3% market consensus) also reinforced the same message.   There are risks on both sides in the near future. On the downside, entertainment price pressures will be partially reduced as the summer holiday season ends. On the upside: The energy subsidy program will come to an end by September; Recent renewed JPY weakness; and rises in pipeline service prices. We believe that upward pressures will likely build a bit more significantly at least for the next few months and push up inflation again. We think inflation will exceed the BoJ’s outlook for this year and next year and core inflation excluding fresh food and energy will likely stay in the 3% range by the end of this year.   Singapore:  July industrial production is set for release today.  We expect another month of contraction, tracing the struggles faced by non-oil domestic exports, which were down 20.2%YoY for the same month.  We can expect industrial production to stay subdued until we see a turn in NODX, which should also weigh on 3Q growth.   What to look out for: Jackson Hole conference Malaysia CPI inflation (25 August) Singapore industrial production (25 August) US Univ of Michigan Sentiment (25 August)
Tepid BoJ Stance Despite Inflation Surge: Future Policy Outlook

Asia Morning Digest: India's GDP Focus, South Korea's Growth Woes, and Japan's Mixed Economic Signals

ING Economics ING Economics 31.08.2023 10:13
Asia Morning Bites India 2Q23 GDP data will be in focus today. More growth momentum worries for the BoK, while Japan's recovery still looks on track. US data continues to come in softer-than-expected.   Global Macro and Markets Global markets: US equities moved slightly higher on Wednesday in fairly steady trading, though the gains were not large. The S&P 500 rose just 0.38%, while the NASDAQ rose 0.54%. Equity futures aren’t giving much clue as to today’s direction. They are slightly positive for the moment, but that could change. Chinese stocks were practically unchanged on the day – for both the Hang Seng and CSI 300. Both indices opened higher, but fairly quickly drifted back towards the previous day’s close. There wasn’t much action in Treasury markets. Yields on the 10Y bond were drifting higher but dropped back on the slightly lower ADP release and the 2Q23 GDP downgrade.  Both the 2Y and 10Y yield fell less than a basis point compared to yesterday. There was more action in FX markets. EURUSD has risen to 1.0931 which feels like a delayed response to earlier rate moves. The AUD shrugged off yesterday’s lower-than-expected inflation data and is now roughly unchanged at 0.6479. Cable made more lasting gains, and has risen back up above 1.27. The JPY is roughly unchanged at 146 after a choppy day yesterday. Other Asian FX had a mixed day, but there were no big movers. The CNY is currently trading at 7.2869.   G-7 macro:  Yesterday’s US macro data continued the softer theme that started a few days earlier. The ADP print of 177K was down from the 195K consensus – though as a predictor of non-farm payrolls, the ADP’s recent record is not good. And 2QGDP was revised lower to 2.1% from the initial 2.4% reading. There was also a slight revision lower of the quarterly core PCE figures. We will get the monthly PCE data for July today. The core PCE inflation rate should nose higher to 4.2% YoY from June’s 4.1% result. Preliminary German CPI inflation data for August yesterday only fell by 0.1pp to 6.4%YoY, less than had been expected. For an excellent read on all things inflation-related, and whether or not to expect a second wave of inflation, please find the time to read this article from our Macro team.   India: 2Q GDP is released later today. Nowcasts for GDP are pointing to about a 7.8%YoY growth rate, up from 6.1% in 1Q23 – though these year-on-year numbers are being whipped around by base effects, and it is not 100% clear that this illustrates any sort of trend. Nonetheless, this would be another solid quarter of growth from India, which has been somewhat insulated from the China spillover weighing on other Asian economies, or the semiconductor downcycle, and would leave the economy on track to achieve something close to 7% growth for the full calendar year.   South Korea: Monthly activity data showed growth momentum running out of steam due to weak domestic demand and weak production of semiconductors. Manufacturing IP dropped 2.0% MoM sa in July (vs revised -1.5%, -1.0% market consensus), led by declines in electrical parts (-11.2%) and machinery (-7.1%). Shipments fell even faster (-5.2%) and so inventories continued to rise (5.2%).  For semiconductors, production dropped by 2.4%, the first decline in five months. However, due to sluggish shipments, inventory levels rebounded again. As inventory adjustment has been slower than expected, the rebound of the chip cycle will probably come even later than the end of this year. Other than manufacturing, construction and services rose 0.8% and 0.4% each, but public administration fell sharply (-6.5%), thus all industry IP fell -0.7% for the first decline in three months.  Meanwhile, consumption and investment also slid with retail sales down -3.2% and facilities investment down -8.9%. The weak start of the quarter means that 3QGDP is likely to slow down quite rapidly compared to the previous quarter’s 0.6% QoQ growth. And the Bank of Korea’s concern about growth will grow. As a result, the BoK will likely remain on hold for now as they first try to utilize micro-level policy tools to support growth. Actual policy rate cuts could come next year.   Japan: July monthly activity data was mixed with weaker-than-expected industrial production vs. stronger-than-expected retail sales. As consumption accounts for a larger share of GDP in Japan, the economy will probably continue its recovery in the current quarter, albeit at a slightly more moderate pace than the previous quarter’s 1.5% quarterly growth rate. Industrial production fell 2.0% MoM sa in July (vs 2.4% in June, -1.4% market consensus) while retail sales rebounded 2.1% (vs revised -0.6% in June, 0.8% market consensus).       What to look out for: India GDP South Korea industrial production (31 August) Japan retail sales (31 August) India GDP (31 August) China PMI manufacturing and non-manufacturing (31 August) Thailand trade balance (31 August) Hong Kong retail sales (31 August) India GDP (31 August) US initial jobless claims, PCE deflator and personal spending (31 August) Japan capital spending and Jibun PMI (1 September) South Korea trade (1 September) Regional PMI (1 September) China Caixin PMI (1 September) Indonesia CPI inflation (1 September) US NFP, ISM manufacturing and industrial production (1 September)
Portugal's Growing Reliance on Retail Debt as a Funding Source and Upcoming Market Events"

Asia Markets React to US Labor Report and Chinese Property Support Measures

ING Economics ING Economics 04.09.2023 10:41
Asia Morning Bites Asian markets digesting Friday's US labour report data and latest property support measures in China.   Global Macro and Markets Global markets: Friday’s soft US labour report got a mixed reception from equity markets, though stocks ended up virtually unchanged on the previous day’s close. Chinese stocks were also mixed, despite new measures to support the property market and the CNY. The Hang Seng fell 0.55%, while the CSI 300 gained 0.7%. Yields on US Treasuries dropped sharply following the labour report, but fully recovered and ended slightly higher. The 10Y yield rose 7.1bp to 4.179%. This feels like an odd move. What also looks a little strange is the USD strength that has taken EURUSD down to 1.0775. We also see USD strength against the AUD, which is down to 0.6452. Cable has dropped to 1.2590 and the JPY, which after strengthening to below 144.50 has weakened back above 146. Asian currencies were fairly range-bound on Friday, though will probably catch up with their G-10 counterparts in early trading today. It is a public holiday (Labor Day) in the US today.   G-7 macro: US payrolls for August rose by 187 thousand, a little more than the 170 thousand expected. But there were a net 110 thousand downward revisions to past months, so the trend growth rate looks a bit weaker than it did. Adding to the general sense that the labour market is finally showing some signs of softening, the unemployment rate rose from 3.5% to 3.8%, and the average hourly earnings rate fell slightly to 4.3%YoY from 4.4% alongside a slight rise in the participation rate. Offsetting the labour market data, the manufacturing ISM index was a bit stronger than expected, though still consistent with the sector contracting.    China:  Cuts to China’s FX reserve requirements on Friday helped the CNY to trade a bit stronger than it has done recently, and there may also have been support from new policy measures to support the property markets in Shanghai and Beijing. However, it is not clear how much additional demand will be generated from lower down payments for properties and encouragement for banks to lower mortgage rates further. It won’t hurt though. Country Garden has won acceptance for its plan to extend payment on its CNY3.9bn onshore bond, though the fate of the USD 22.5mn bond payment due on 6/7 September remains unclear.   What to look out for: Regional trade and inflation data out later in the week Japan monetary base (4 September) Australia Melbourne institute inflation (4 September) South Korea GDP and CPI inflation (5 September) Japan Jibun PMI services (5 September) Regional PMI (5 September) China Caixin PMI services (5 September) Philippines CPI inflation (5 September) Thailand CPI inflation (5 September) Australia RBA decision (5 September) Singapore retail sales (5 September) US factory orders and durable goods orders (5 September) Australia GDP (6 September) Taiwan CPI inflation (6 September) US trade balance and ISM services (6 September) China trade balance (7 September)  Australia trade balance (7 September) Malaysia BNM policy (7 September) US initial jobless claims (7 September) Japan GDP (8 September) Philippines trade balance (8 September) Taiwan trade balance (8 September) US wholesale inventories (8 September)
Morning Market Update: Korean Inflation Surprises, RBA Governor's Final Meeting Expected to Be Uneventful

Morning Market Update: Korean Inflation Surprises, RBA Governor's Final Meeting Expected to Be Uneventful

ING Economics ING Economics 05.09.2023 11:18
Asia Morning Bites Korean inflation surprises on the upside as bad weather causes food prices to spike. Lowe's last meeting as RBA Governor is likely to be uneventful.   Global Macro and Markets Global markets:  With the US out for Labour Day on Monday, there isn’t much market action to report. Equity futures aren’t providing much insight into today’s open either. Chinese stocks had a good start to the week, buoyed by further reductions in down payments for mortgages across a number of Chinese cities and the Country Garden debt repayment deal. The CSI 300 rose 1.52% and the Hang Seng rose 2.51%. European bond yields rose slightly, The yield on German 2Y and 10Y government bonds rose by about 3bp. EURUSD had a quiet day and remains below 1.08. The AUD was also steady ahead of today’s likely no-change RBA meeting. Sterling made some small gains taking it back above 1.26 and the JPY drifted fractionally higher to 146.49. There was very little action in Asian FX markets, besides the THB, which weakened to 35.235   G-7 macro:  With the US out on vacation, there was nothing of note on the G-7 calendar yesterday.  Final service sector and composite PMIs are out today in Europe. No changes are expected.  Final US durable goods orders and factory orders are due for July. Factory orders will likely reverse the 2.3% gain in June with a 2.5% decline. The ECB’s Lagarde gave nothing away about next week’s rate meeting in a speech yesterday in London. But the Bundesbank President, Joachim Nagel, suggested raising reserve requirements to “tackle the excess liquidity story”. Australia: The Reserve Bank of Australia (RBA) meeting today is Governor Philip Lowe’s last, and it should be an uneventful one. The surprise drop in inflation in July from 5.4% to 4.9% should be enough to keep rates on hold at this meeting. And indeed, we may have seen the peak in rates from the RBA as Michele Bullock takes over. However, the next three months’ base effects are far less helpful than they have been in the prior 6 months, and we may see inflation’s progress stall or even backslide. So, while the chances of another and almost certainly final rate hike have diminished, we aren’t totally ruling out one more before the year-end.   Singapore: Retail sales for July are set for release this afternoon. We expect another month of modest gains with retail sales up roughly 2%YoY.  The steady increase of visitor arrivals is likely supporting department store sales and services related to rest and recreation.  Retail sales have been one of the few bright spots for the economy this year with both trade and manufacturing struggling.      South Korea: Consumer price inflation reaccelerated in August after six months of cooling, recording a 3.4% YoY gain (vs 2.3% in July and the market consensus of 2.9%). The main upside surprises came from fresh food and pump prices, which rose more than expected due to bad weather and the recent pick-up in global oil prices. However, core inflation (excluding food and energy) stayed at 3.3% for a second month. Although the pace of inflation sped up again, it does not deviate much from the BoK’s own inflation projection and it is likely to be considered a temporary pick-up only. Also, with weaker-than-expected monthly activity data, domestic growth conditions are expected to deteriorate further in 2H23, so it is unlikely that the Bank of Korea (BoK) will respond with an additional rate hike. Looking ahead, we believe headline inflation will calm down after Chooseok holiday, but core inflation will likely accelerate again over the next couple of months which will support the BoK’s hawkish tone throughout the year. Based on today’s results, we have revised up our annual CPI forecast from 3.3% YoY to 3.5% for 2023 and 1.8% to 2.0% for 2024. Also, given inflation will likely remain above the BoK’s target until the end of this year, we have pushed back our forecast for the BoK’s first cut from 4Q23 to 2Q24.    Philippines: August inflation is set for release today. The market consensus is for inflation to be flat at 4.7%YoY.  We expect, however, the impact of accelerating prices for rice and energy-related commodities to push headline inflation to 5.0%YoY.  Crop damage and low production due to the onset of El Nino have pushed up retail prices for rice, which counts for 9% in the CPI basket. What to look out for: RBA decision South Korea GDP and CPI inflation (5 September) Japan Jibun PMI services (5 September) Regional PMI (5 September) China Caixin PMI services (5 September) Philippines CPI inflation (5 September) Thailand CPI inflation (5 September) Australia RBA decision (5 September) Singapore retail sales (5 September) US factory orders and durable goods orders (5 September) Australia GDP (6 September) Taiwan CPI inflation (6 September) US trade balance and ISM services (6 September) Australia trade balance (7 September) China trade balance (7 September) Malaysia BNM policy (7 September) US initial jobless claims (7 September) Japan GDP (8 September) Philippines trade balance (8 September) Taiwan trade balance (8 September) US wholesale inventories (8 September) Meanwhile, resurgent global energy costs have filtered through to higher domestic fuel prices. With inflation flaring up again, we could see Bangko Sentral ng Pilipinas forced to put off their rate cuts, possibly into mid-2024. 
iPhones Banned in Chinese Offices: Tech Tensions Escalate

Asia Morning Bites: Asian FX Under Pressure as US Rates Climb, Australia and China Trade Reports in Focus

ING Economics ING Economics 08.09.2023 10:13
Asia Morning Bites Higher for longer US rates trade takes its toll on Asian FX. Australia and China trade reports out.   Global Macro and Markets Global markets:  Market sentiment turned sour again yesterday, with stocks across the board dropping. The S&P 500 opened down and went lower over yesterday’s session, falling 0.7% from the previous day. The NASDAQ fell 1.06% and equity futures today are showing no respite. Chinese stocks also fell, though only slightly. The Hang Seng fell 0.04% and the CSI 300 fell just 0.22%. US bond yields pushed higher yesterday as the market continued to take out easing previously priced in for 2024/25. 2Y US Treasury yields rose 5.6bp while 10Y yields rose  2bp to 4.28%. EURUSD stayed at the low end of 1.07 on Wednesday. The AUD was also flat at about 0.6380 despite better-than-expected GDP data, as was the JPY at 147.71 despite comments from officials saying they would take action amid speculative market moves. Sterling dropped below 1.25 on suggestions from Governor Bailey that the rate tightening cycle in the UK was done, or if not, nearly done.  Asian FX sold off against the USD yesterday. The SGD unusually propped up the bottom of the list, weakening 0.27% to 1.3639. The CNY rose above 7.30 to reach 7.3180, and we would anticipate a forceful response from the PBoC at this morning’s fixing. G-7 macro:  The US services ISM index unexpectedly rose yesterday, rising to 54.5 from 52.7 (52.5 expected). There were also gains in the prices paid index, employment, and new orders. This is what drove the market to price out further easing next year, helping to lift the USD. The Fed’s latest Beige Book was somewhat downbeat given the ISM numbers. Today, there isn’t too much to look out for. US non-farm productivity and unit labour costs are both residuals from earlier GDP data and don’t really add to the sum of knowledge on the US economy. Weekly jobless claims are the only other US data of note. The Eurozone releases final GDP figures for 2Q23. No revisions are expected. China:  August trade figures will likely show a slight moderation in the pace of contraction, though it would be generous to describe this as a bounce. A trough might be a more accurate description. Still, that’s better than what has gone before, so it could buoy sentiment. The trade balance may shrink slightly despite this, from the $80.6bn figure from July. Australia:  A slight contraction in Australia’s AUD11.3bn trade surplus for July is also expected for the August figures published later this morning. This is unlikely to have any meaningful impact on the AUD, whose current weakness is more a function of broad USD strength.    What to look out for: China and Australia trade balance Australia trade balance (7 September) China trade balance (7 September) Malaysia BNM policy (7 September) US initial jobless claims (7 September) Japan GDP (8 September) Philippines trade balance (8 September) Taiwan trade balance (8 September) US wholesale inventories (8 September)
Asia Morning Bites: Key Comments from Bank of Japan and Upcoming Global Economic Data

Asia Morning Bites: Key Comments from Bank of Japan and Upcoming Global Economic Data

ING Economics ING Economics 11.09.2023 10:51
Asia Morning Bites Comments from the Bank of Japan's Ueda may be the main story for Monday. Later this week, US inflation and the China data dump could provide more direction.   Global Macro and Markets Global markets:  US stocks didn’t manage to make any headway on Friday, despite opening up, and drifted slowly lower over the session, ending only fractionally higher than the previous day’s close. Equity futures suggest another positive open today. Chinese stocks continued to struggle, with nerves showing ahead of what will be a big data week for China. The Hang Seng Index fell 1.34% and the CSI 300 was down 0.49%. US Treasury yields rose again. The yield on the 2Y UST rose 4.4bp, while that on the 10Y bond rose just 2bp to 4.264%. EURUSD skirted just under the 1.07 level at times on Friday, and its attempt to move higher didn’t succeed. It is currently 1.0709. The AUD is slightly stronger though still trading below 64 cents. Cable is fairly flat at 1.2478 and the JPY lost ground but has rallied in early trading today and is back to 147.24 after Bank of Japan (BoJ) Governor Ueda signalled to a newspaper that wages data may provide enough information by the end of the year to determine whether to end its super-easy policy. It was a mixed day for Asian FX currencies. At one end, the PBoC seemed to relinquish more ground with a fix above 7.20 which allowed CNY to trade above 7.35. At the other end, there were gains for the INR and THB.  The INR is trading back now within the previous range and just below 83. G-7 macro:  The G-20 in India managed to achieve more than cynics might have expected, given President Xi’s absence. A joint communique was reached, and actions were agreed on climate change and debt relief, as well as opening the group to the African Union. Ukraine has criticized the communique for watering down the language on Russia’s invasion. There was very little data out on Friday, but one data point that may have flown under the radar, was the US consumer credit figures for July, which dropped sharply from the previous month. Are households maxing out? If so, this could threaten Janet Yellen’s soft landing hypothesis, which she seemed to be embracing at the G-20 summit. There is not much on the G-7 calendar today. The ECB will meet to decide on rates later this week. The consensus is still split on the decision, as is the market. We narrowly favour a hike. China:  Over the weekend, China released August inflation data which rose back above the zero line, though only just, rising to 0.1%YoY. Later this week, we have the monthly data dump, which may also show some modest improvements from last month – the emphasis is on the word modest though… At least we won’t have to endure inaccurate references to deflation for a month. What to look out for: US CPI inflation and China data Japan M3 and machine tool orders (11 September) China M3 money supply (11 September) Australia Westpac consumer confidence (12 September) US NFIB survey (12 September) India CPI (12 September) South Korea unemployment (13 September) Japan PPI inflation (13 September) India trade balance (13 September) US CPI inflation (13 September) Japan core machine orders and industrial production (14 September) Australia unemployment (14 September) ECB policy meeting (14 September) US initial jobless claims, PPI and retail sales (14 September) China medium term lending rate (15 September) Indonesia trade balance (15 September) China retail sales, industrial production (15 September) US University of Michigan sentiment (15 September)  
Chinese Stocks: Attractive Valuations Amidst Challenges and a Cyclical Recovery - 12.09.2023

Chinese Stocks: Attractive Valuations Amidst Challenges and a Cyclical Recovery

Saxo Bank Saxo Bank 12.09.2023 11:45
Despite lingering uncertainties and negative sentiment toward Chinese stocks, they offer attractive valuations, with the Hang Seng Index trading at 9x earnings and CSI300 at 12x earnings for 2023. Last week it started strong, bolstered by eased property regulations and a resurgence in manufacturing PMI. However, concerns over the services sector, U.S.-China tech tensions, and market performance dimmed sentiment. CPI rebounded, while PPI improved. Notably, August saw a substantial increase in new Yuan loans and government bond financing, indicating economic support. Key data to watch this week include industrial production, retail sales, and fixed asset investment trends.   Key Highlights from the Article Chinese stocks offer potentials for a tradable rally Market sentiment fluctuated due to concerns over tech tensions and PMI data. August saw a significant increase in new Yuan loans and government bond issuance. CPI rebounded, while PPI showed signs of improvement in China's economy. Key data this week includes industrial production, retail sales, and fixed asset investment.   Attractive Valuation and Light Positioning Amidst an Upcoming Cyclical Recovery Despite a series of regulatory measures aimed at revitalizing the property and mortgage markets, market responses have remained somewhat subdued. Nevertheless, we are optimistic that these initiatives will contribute to a surge in mortgage loan growth, building on the rebound witnessed in August aggregate social financing data (see below). Our outlook suggests the likelihood of a cyclical recovery in the Chinese economy, particularly in Q4, even though the medium-term prospects remain uncertain and riddled with challenges. Notably, Chinese stocks bear a significantly below-average weight in institutional investors' portfolios, compounded by prevailing negative sentiments. Additionally, a series of economic and earnings growth downgrades by analysts has set a relatively low bar for the Chinese and Hong Kong equity markets to surpass. As of the latest data, the Hang Seng Index is currently trading at around 9x earnings for 2023 or 6x operating cash flows. Meanwhile, the CSI300 is trading at 12x earnings for 2023 or 8x operating cash flows. These valuation multiples present attractive opportunities for investors seeking a potential tradable rally in the context of the upcoming cyclical recovery.     Recap of Key Developments from the Previous Week The week commenced on a robust note, driven by a series of measures aimed at easing regulations in the property market and mortgage sector. These initiatives were particularly designed to reduce costs for prospective homebuyers, especially those eyeing properties in first-tier cities. For a more comprehensive discussion of these policies, please refer to our Weekly Market Pulse from last week. The market rally received an additional boost from the resurgence of the Caixin China Manufacturing PMI, which returned to expansionary territory, registering at 51.00—the highest level since the 51.6 reading in February. Furthermore, semiconductor stocks and other companies within Huawei's supply chain witnessed increased demand after Huawei unveiled its Mate 60 Pro mobile phone, showcasing impressive 5G capabilities. This development implied a significant breakthrough in its processor supplier, SMIC, which has apparently entered commercial production of 7nm chips. However, as the week progressed, market sentiment began to wane in response to a significant drop in the Caixin Services PMI, which fell to 51.8 in August from July's 54.1. This decline reignited concerns about the challenges facing the Chinese economy. Moreover, investor anxiety mounted over the rising risks of the United States tightening semiconductor technology restrictions on China, with the House of Representatives' Committee for China advocating an end to all technology exports to Huawei and SMIC. Fears of escalating tensions between China and the U.S. in the technology sector were further fueled by reports in foreign media outlets suggesting that Chinese authorities were restricting government and state-owned enterprise employees from bringing iPhones to their workplaces. While it has long been the case that officials working in sensitive government departments were not allowed to use iPhones for work purposes, anecdotal events and social media discussions indicated an increase in government departments urging officials to abstain from using iPhones. However, a nationwide directive imposing widespread restrictions on iPhone use in government departments and state-owned enterprises has yet to be confirmed and in our opinion tends to be unlikely. These concerns surrounding the intensification of the technology war between China and the U.S. cast a shadow over market sentiment, resulting in negative market performance. The Hang Seng index was down nearly 1% during a rainstorm and flooding-shortened week, while the CSI300 experienced a 1.4% decline.   CPI Bounces Back to Positive Territory in August, Indicating Encouraging Signs China's Consumer Price Index (CPI) rebounded moderately, rising by +0.1% year-on-year, as expected, after July's deflationary reading of -0.3%. This upturn was supported by a low base effect from the previous year. Notably, non-food inflation accelerated to +0.5% year-on-year in August, up from 0.0% in July, while the Core CPI, which excludes food and energy components, remained steady at +0.8% in August. On a monthly basis, the CPI increased by +0.3% in August, compared to +0.2% in July. In contrast, the Producer Price Index (PPI) continued to contract, but at a less severe rate, declining by -3.0% year-on-year, showing improvement from July's -4.4%. This improvement was attributed to both a low base from the previous year and the recovery in domestic and global commodity prices.   Sharp Increase in New Yuan Loans and Government Bond Issuance in August Released on Monday, China witnessed a significant surge in new Yuan loans during August, surpassing expectations, reaching RMB 1,360 billion, compared to RMB 346 billion in the previous month and RMB 1,250 billion in August of the previous year. This surge can be attributed to increased regulatory encouragement for banks to extend loans and favorable seasonal factors. Corporate loans played a significant role in this increase, surging to RMB 949 billion in August, up from RMB 238 billion in July, surpassing the previous year's RMB 875 billion. Notably, the medium to long-term portion of new household loans, primarily mortgage loans, rebounded to RMB 160 billion, reversing a net repayment of RMB 67 billion in July. The growth rate of outstanding RMB loans remained steady at +11.1% year-on-year, mirroring the previous month's figure. Additionally, new government bond financing surged to RMB 1,180 billion in August, up from RMB 411 billion in the previous month and RMB 305 billion a year ago. With robust loan growth and the front-loading of local government bond annual issuance quotas, the aggregate social financing data for August reached RMB 3,120 billion, a substantial increase from July's RMB 528.5 billion. The year-on-year growth of outstanding aggregate social financing slightly increased to +9.0% in August, compared to 8.9% in July.   Key Data to Watch This Week This week, keep an eye on the upcoming activity data releases. According to Bloomberg consensus forecasts, we can expect several notable trends: Industrial Production: In August, industrial production is projected to rise by 3.9% Y/Y, an increase from July's 3.7%. This uptick is a reflection of robust manufacturing PMI data, indicating a strengthening industrial sector. Retail Sales: August is expected to bring a 3.0% Y/Y growth in retail sales, outpacing the 2.5% growth seen in July. This growth is anticipated to be driven by increased auto sales and catering services. Fixed Asset Investment: While infrastructure construction was likely supported by the front-loading of local government bond issuance in August, there are factors to consider. The comparison with a high base from the previous year and continued weakness in property construction may restrict the growth of fixed asset investment for August. Consequently, the Bloomberg consensus suggests a year-to-date slowdown in fixed asset investment, declining to 3.3% Y/Y from the previous rate of 3.4%.
Nasdaq Slips as Tech Stocks Falter, US Inflation Data Awaits

Nasdaq Slips as Tech Stocks Falter, US Inflation Data Awaits

ING Economics ING Economics 13.09.2023 08:47
Asia Morning Bites US inflation report out tonight could see Asian markets mark time today.   Global Macro and Markets Global markets:  US stocks are up one day, down the next at the moment. Yesterday, it was time for some losses led by tech stocks following an Apple event to launch the iPhone 15. The S&P 500 dropped 0.57% while the NASDAQ lost 1.04%. This was actually in line with the steer from equity futures yesterday. But today, they are giving little away. Chinese stocks fell also. The Hang Seng was down 0.39% and the CSI 300 was down 0.18%. 2Y US Treasury yields nosed up 2.9bp to 5.02%, while the 10Y Treasury yield was marginally lower by 0.8bp taking it to 4.28%. EURUSD is slightly higher at 1.0758, but spent a lot of time yesterday exploring the downside before recovering. This hasn’t helped the AUD, which has been steady to slightly weaker over the last 24 hours, sitting at 0.6427 currently. Cable also slid yesterday and made a less robust recovery than the euro, leaving it at 1.2492 currently. And the JPY is also softer, rising to 147.126.  The PBoC’s recent browbeating of the market still seems to be keeping a lid on the CNY, which remains at 7.2923. We’d expect it to test the 7.30 level again in the coming days, though tomorrow’s data dump will need to be taken into account – we think it might be slightly less negative than in recent months…The KRW had a positive day, rising 0.28% to 1327.64, and the THB weakened 0.38% to 35.640, but there were few other notable movements in the rest of the Asia FX pack.   G-7 macro:  Today, we get August inflation data from the US. And the news will be mixed. Headline inflation will likely rise from 3.2% to 3.6%YoY - all the helpful base effects that helped lower inflation in the first half of the year are used up now, and the month-on-month rate at 0.6% (expected), is still far too high to result in anything other than an inflation increase. But it is exactly the opposite story for core inflation, which has been much stickier, but could now benefit from more helpful base effects, and the fact that most of the price increases are in the non-core food and energy sectors. We should see core inflation falling to 4.4% (consensus 4.3%) from 4.7% YoY. Exactly how the market takes this mix of data is difficult to judge in advance, and could come down to small deviations from the consensus numbers on both figures. Other than this, the UK releases a raft of production, trade, construction and monthly GDP data for July.   India: Trade balance data for August will likely show the deficit in the -USD20bn to -USD21bn range. Export growth has been on a slow but steady decline for a long time, and was -15.86%YoY in July. Looked at in USD levels terms, exports are still trending slightly lower, but the rate of annual decline should moderate to low single digits this month. Inflation data released yesterday evening came in at 6.83%, only slightly higher than our 6.7% forecast, and slightly lower than the consensus 7.1% estimate.   South Korea: The jobless rate unexpectedly declined to 2.4% in August (vs 2.8% July, 2.9% market consensus). The construction sector added jobs for the first time in six months but manufacturing shed jobs for a second month. With summer holidays underway, hotels and restaurant jobs gained. Rising pipeline inflation raised concerns that consumer prices could rise more than expected in the coming months. Import prices surged 4.4% MoM nsa (0.2% in July), the largest increase in 17 months, but due to base effects the YoY growth still fell -9.0%YoY (vs -13.6% in July). Weak currency and strong commodity prices are the two main reasons for the price increases. The KRW is hovering above the 1,300 level and oil prices continue to rise. We are concerned that consumer price inflation may rise more than expected. The tighter job market and rising prices will support the BoK’s hawkish stance. But we still don’t think this will push them to deliver additional hikes by the end of this year given sluggish exports and weak investment.   What to look out for: US CPI inflation and China data South Korea unemployment (13 September) Japan PPI inflation (13 September) India trade balance (13 September) US CPI inflation (13 September) Japan core machine orders and industrial production (14 September) Australia unemployment (14 September) ECB policy meeting (14 September) US initial jobless claims, PPI and retail sales (14 September) China medium term lending rate (15 September) Indonesia trade balance (15 September) China retail sales, industrial production (15 September) US University of Michigan sentiment (15 September)
Asia Morning Bites: Singapore Inflation and Global Market Insights - 25 September 2023

Asia Morning Bites: Singapore Inflation and Global Market Insights - 25 September 2023

ING Economics ING Economics 25.09.2023 11:23
Asia Morning Bites 25 September 2023 Singapore inflation to ease slightly lower on a quiet day for macro.   Global Macro and Markets Global Markets: Friday was a choppy day for US stocks, and though they ended marginally down, futures suggest that they will open positively today. Chinese stocks had a rare positive day. The CSI 300 rose 1.81%, while the Hang Seng index climbed 2.28%. US Treasury yields declined across the curve on Friday. 2Y UST yields fell 3.4bp to 5.11%, while yields on the 10Y bond fell 6bp to 4.434%. That didn’t have much impact on the USD. EURUSD. remained almost unchanged at around 1.0650. The AUD gained a little, rising to 0.6440, and the GBP slid further to 1.2243. James Smith has made a video which describes how markets are now eyeing rate cuts following the recent Bank of England pause. The JPY weakened on Friday after the disappointing lack of anything new from Governor Ueda at Friday’s BoJ meeting. Here’s a note by Min Joo Kang on the meeting and her thoughts about what comes next. Apart from the JPY, most Asian currencies made modest gains on Friday, with the THB and KRW out in front. The THB is sitting just above 36 currently, the KRW at 1336.75.   G-7 macro: There was very little on the macro calendar on Friday apart from the Bank of Japan meeting, and it is a quiet start to the week too, with Germany’s September Ifo survey the only notable data point.  Singapore:  Singapore reports inflation today on a quiet day in what will be a quiet week, with much of Asia off for mid-Autimn holidays later this week.  The market consensus suggests a slight dip for both headline and core inflation as favourable base effects and softer retail sales kick in. Headline inflation could dip to 4%YoY (from 4.1%YoY), while core inflation should slip to 3.5%YoY from 3.8%.  This alongside slowing growth will be factored into the upcoming MAS decision next month with no likely adjustments to policy settings just yet.      What to look out for: US sentiment data Singapore inflation (25 September) Japan department store sales (25 September) US Dallas and Chicago Fed national activity (25 September) Fed Kashkari speaks (25 September) South Korea consumer confidence (26 September) Singapore industrial production (26 September) US Conference board consumer confidence, new home sales, FHFA house price index (26 September) Australia CPI inflation (27 September) China industrial profits (27 September) Japan machine tool orders (27 September) US durable goods orders and MBA mortgage applications (27 September) Australia retail sales (28 September) US initial jobless claims, personal consumption, pending home sales (28 September) Fed's Powell, Goolsbee and Barkin speak (29 September) Japan Tokyo CPI inflation and labor report (29 September) Thailand trade (29 September) US University of Michigan sentiment, personal spending (29 September)
Asia Morning Bites: Singapore Industrial Production and Global Market Updates

Asia Morning Bites: Singapore Industrial Production and Global Market Updates

ING Economics ING Economics 26.09.2023 14:40
Asia Morning Bites Singapore reports August production figures. Global bond yields keep rising. USD keeps gaining.   Global Macro and Markets Global markets:  US equity markets did what the futures markets had earlier suggested, and rose modestly yesterday. The S&P 500 and NASDAQ were both up respectively 0.4% and 0.45%, though this took some effort as stocks opened down and had to dig themselves out of a hole to achieve even this modest increase. Additional slight gains are signalled by the futures markets currently. Chinese stocks turned negative again yesterday, reversing Friday's gains. The Hang Seng fell 1.82% while the CSI 300 fell 0.65%. US Treasury yields continue to move higher. The 10Y yield rose 10bp yesterday, taking it to 4.533%. There was less going on with the 2Y yield, which rose only 1.5bp to sit at 5.125%. Fed speakers are cited as being behind some of the weakness in demand for Treasuries, according to one newswire. However, the most notable Fed speaker yesterday, Austan Goolsbee, a renowned dove, merely said that a soft landing remains a possibility, but that there remain risks. That doesn’t feel like it was worth 10bp on the 10Y, probably not even 1bp. Rising yields have boosted the USD, and EURUSD has dropped below 1.06 to 1.0595. It was slightly lower back in February and March this year when it got down to 1.0516. The AUD has drifted down to 0.6423, Cable has similarly gone down to 1.2215, and the JPY has weakened to 148.83 as Governor Ueda stuck with his exceptionally cautious tone on the outlook for inflation. Other Asian FX was mostly slightly weaker against the USD on Monday. The CNY is back above 7.30 at 7.3120, and despite the recent bond news, the INR has risen back above 83. As has often been the case recently, the THB is propping up the bottom of the league table.      G-7 macro:  Yesterday was thin for Macro, with a slightly weaker German Ifo survey as the main data point. The Chicago Fed national activity index (a contemporaneous recession indicator) fell below the zero mark in August, but house prices continued to rise. Today, US new home sales and the Conference Board consumer confidence index are the main releases.   Singapore:  Singapore reports industrial production numbers for August later today. We can expect another month of contraction for industrial production as the sector tracks the struggling export market.  Non-oil domestic exports have seen a string of negative growth numbers due to soft global demand, and we expect industrial production to stay subdued until we see a meaningful pickup in global trade.      What to look out for: US consumer confidence South Korea consumer confidence (26 September) Singapore industrial production (26 September) US Conference board consumer confidence, new home sales, FHFA house price index (26 September) Australia CPI inflation (27 September) China industrial profits (27 September) Japan machine tool orders (27 September) US durable goods orders and MBA mortgage applications (27 September) Australia retail sales (28 September) US initial jobless claims, personal consumption, pending home sales (28 September) Fed's Powell, Goolsbee and Barkin speak (29 September) Japan Tokyo CPI inflation and labor report (29 September) Thailand trade (29 September) US University of Michigan sentiment, personal spending (29 September)
Worsening Crisis: Dutch Medicine Shortage Soars by 51% in 2023

Asia Morning Bites: Focus on China's Caixin Services PMI and Anticipation for US Non-Farm Payroll Data

ING Economics ING Economics 03.11.2023 14:07
Asia Morning Bites China's Caixin services PMI report will be the focus for today ahead of tonight's US non-farm payroll data.   Global markets and macro Global markets:  Front-end US Treasury yields bounced slightly yesterday after their big post-FOMC drop. 2Y UST yields rose 4.6bp, but remain below 5% (4.989%). But yields on the 10Y Treasury kept falling, dropping a further 7.5bp to 4.659%.  US equity markets are benefitting from the drop in bond yields. The S&P 500 rose a very decent 1.89%, and the NASDAQ was also up (1.75%). Chinese stocks were more mixed. The CSI 300 fell 0.47% on Thursday, but the Hang Seng rose 0.75%. The USD lost further ground on Thursday. EURUSD rose to 1.0617. The AUD rose to 0.6428. Cable pushed back above 1.22, though has dropped back to 1.2194 now, and the JPY has eased down to about 150.5.  Asian FX was broadly stronger against the USD on Thursday and looks likely to keep making gains today.  The KRW led the rest of the Asia FX pack, dropping to 1343. The THB followed, dropping to 35.99. The CNY also made small gains, and USDCNY has moved down to 7.3143.   G-7 macro: It was the turn of the Bank of England to sit on its hands yesterday, following the FOMC’s “pause” the previous day. The MPC committee decided to leave Bank Rate at  5.25%. But pushed back against the market’s expectation for rate cuts next year. Today, non-farm payrolls provide us all the entertainment we need to take us into the weekend. For what it is worth, the consensus forecast for the payrolls headline is +180K, with no change in the unemployment rate (3.8%) and average hourly earnings growth dropping from 4.2% YoY to 4.0%. We also get the non-manufacturing ISM. However, whatever it produces will be eclipsed by the payroll numbers.   China:  After the disappointments of the official PMIs, and then the Caixin manufacturing PMI indices earlier this week, the consensus view of a slight rise of the Caixin service-sector PMI to 51.0 from 50.2, looks in strong danger of being undershot.   Singapore: September retail sales are due for release later today.  We can expect another month of modest expansion with retail sales possibly up roughly 1.5%YoY supported by robust department store sales driven by the return of visitor arrivals. Retail sales have been a bright spot for economic growth this year but elevated inflation should cap its upside in the near term.    What to look out for: China Caixin PMI services and US NFP China Caixin PMI services (3 November) Singapore retail sales (3 November) US NFP and ISM services (3 November)
China's Steel Output Declines: Impact on Metals Market

Asia Morning Bites: Currency Retreat Amid Lower US Yields and Global Market Insights - November 8, 2023

ING Economics ING Economics 08.11.2023 14:13
Asia Morning Bites Asian currencies retreat despite lower US yields.   Global Macro and Markets Global markets:  US Treasury markets reversed their bounce on Tuesday and resumed their decline. Yields on 2Y US Treasuries fell 1.7bp, while those on the 10Y UST fell 7.7bp to 4.566%. Better demand helped yields to drop, with a decent 3Y auction. There is 10Y supply today.  Strangely, despite hiking rates by 25bp, a move that had not been fully priced in by markets, even if it was widely predicted by economists, Australian 10Y government bond yields fell 10.9bp to 4.584%. The accompanying statement was not particularly dovish, merely maintaining the data dependency of previous statements. See here for our note on the Reserve Bank’s decision, which includes a link to the statement itself.  Despite yields declining, EURUSD moved lower yesterday, reaching 1.0664 before bouncing back to just below the 1.07 mark. The AUD is all the way back to 0.6430 from just below 0.65 the previous day. Cable has slid back to 1.2292 from about 1.2380 this time yesterday, and the JPY is back above 150. The rest of the Asian FX pack was largely weaker against the USD on Tuesday. The KRW gave back some of its recent gains, rising back to 1308, and followed closely by the IDR and MYR.  USDCNY is fairly stable at about 7.28. US stock markets made small gains yesterday. The S&P 500 rose 0.28%, while the NASDAQ rose 0.9%. Equity futures are not giving much of a directional steer about today’s open. Chinese stocks were down yesterday, possibly responding to the shrinking trade surplus, though there were potentially more positive spots of light in that data set (see also here for our take). G-7 macro:  It was a relatively quiet day for macro yesterday. German industrial production weakness was one highlight and raises the probability that Germany finishes the year in a technical recession. US trade data also showed the American trade deficit widening. Today is also very quiet, with final Eurozone CPI inflation data for October, as well as US mortgage applications. The Fed speaker calendar hots up today, with 4 Fed speakers. Yesterday, Neel Kashkari repeated his fairly hawkish comments of the day before. South Korea:   The current account surplus widened in September to USD5.4bn (vs revised USD5.0bn in August). The merchandise surplus widened but was partially offset by a widening of the services deficit. Looking ahead, we expect some monthly ups and downs but expect the surplus to continue for the time being, supporting the KRW. Apart from the recent UST fluctuations and volatile movements centred on domestic equity market regulation issues, we look for an improvement in the KRW’s fundamentals.  This afternoon, data on Korean bank lending to households will be announced. We expect this to show an increase with the recent revival of jeonse and property prices. Authorities have tightened some mortgage rules since September to curb the rapid increase in household debt, so the pace of growth is expected to decelerate. The BoK is closely watching household debt as a major risk factor, and if debt grows faster than anticipated, the BoK’s hawkish comments will likely strengthen. What to look out for: Fed speakers South Korea BoP current account balance (8 November) Japan leading index (8 November) US wholesale inventories and MBA mortgage applications (8 November) Fed Chair Powell and Fed official Cook speak (8 November) Japan BoP current account balance (9 November) China CPI inflation (9 November) Philippines 3Q GDP (9 November) US initial jobless claims (9 November) US University of Michigan sentiment (10 November)
The Yen's Rocky Start to 2024: Impact of Earthquake and Bank of Japan's Caution

Asia Morning Bites: Rising US Treasury Yields Impact Asian FX, RBA's Monetary Statement, and India's Industrial Production Report

ING Economics ING Economics 10.11.2023 10:24
Asia Morning Bites Rising US Treasury yields should weigh on Asian FX today. Also, the RBA has released its latest monetary statement and India will report industrial production later.   Global macro and markets: Global markets:  A disappointing auction for 30Y Treasuries yesterday fed through to higher yields across the curve.  The yield on the 30Y bond rose 15bp to 4.765%, and that lifted yields on the 10Y (+14.9bp to 4.624%) and also the 2Y (+8.8bp to 5.02%). Despite nosing below 4.5% the other day, it looks for now as if yields are happier this side of that line, though will get tested again next week as US inflation numbers look set to drop sharply. Our US economist, James Knightley, thinks that US inflation could drop to around the target range by 2Q24.  Jerome Powell took a tough line in his remarks early this morning at the IMF conference, saying that the Fed wouldn’t hesitate to hike if needed and that the inflation fight had a long way to go. These comments may also have helped to lift yields. Powell’s tone makes sense. There is no point in corralling the market into expecting cuts until shortly before they look necessary. However, there will come a point where the rhetoric and the macro diverge to such an extent that either markets call the Fed’s bluff, and start to price in cuts, or the Fed has to do an abrupt turn and throw in the towel. For now, though, further tough talk is likely. Whether this transforms into tough action will depend on the run of the macro data. Higher yields gave the USD another lift, and EURUSD dropped back to 1.0665. The AUD, which has been trading heavily since the RBA hike, dropped to 0.6360.  Cable is down to 1.2216 and the JPY has risen up to 151.35. Asian FX was slightly softer yesterday against the USD, and will likely soften further today in line with the overnight G-10 FX moves. USDCNY is back to 7.2846 and pushing back in the direction of 7.30. US stocks don’t like these higher yields, and the S&P 500 dropped 0.81% yesterday. The NASDAQ was down 0.94%. Chinese stocks were mixed to flattish, with the CSI 300 up just 0.05% and the Hang Seng down 0.33%. G-7 macro:  There was nothing too exciting on the macro calendar yesterday. Even the weekly US jobless claims were close to expectations, with a slight overshoot for the continued claims numbers. There is no US data to speak of today, and UK production and trade figures dominate the G-7 calendar. These won’t have any broader bearing on markets outside the UK. Australia:  The RBA has released its November statement on monetary policy. We did not think that the statement released with the earlier rate hike decision was particularly dovish, though the market certainly seemed to think so. We don't think this longer more detailed statement is particularly dovish either, but the link is included above, so have a read and make up your own mind. Once again, the market seems to have decided that whatever the content of the statement, lower yields are the way to go. We think that a bit of reflection may see that view reverse in time. That said, we do think rates have probably peaked. But there are risks to this view. The first is that inflation may well increase again when October data is released. Secondly, the monthly run rate (MoM% increase in the price level) has been 0.6% for the last two months, and that is way too high to be consistent with the RBA's inflation target. So that needs to drop, or there is still a chance, in our opinion, that rates have to rise again next year.   India:  September production data will be released later this evening, and the consensus forecast is for a drop from the 10.3% YoY rate of growth recorded in August, to just 7.0% in September. This would be consistent with a decline in the level of production, as implied by the sub-50 PMI index in September. We wouldn’t be surprised if the production growth figure came in a fair bit higher than that, as we aren’t convinced that, despite the PMI numbers, we will see an actual contraction in activity in September. What to look out for: India industrial production and Fed speakers India industrial production (10 November) US University of Michigan sentiment (10 November) Fed Bostic and Logan speak (10 November)
Federal Reserve's Stance: Holding Rates Steady Amidst Market Expectations, with a Cautionary Tone on Overly Aggressive Rate Cut Pricings

Asia Morning Bites: Singapore Inflation and Bank of Indonesia Policy Meeting in Focus amid Thanksgiving Holiday

ING Economics ING Economics 23.11.2023 13:01
Asia Morning Bites Asian highlights today include Singapore's October inflation and the Bank of Indonesia (BI) policy meeting. Markets may well be quiet with the US out for Thanksgiving.   Global macro and markets Global markets:  It was another quiet day in markets ahead of what will be an even quieter one today thanks to the US Thanksgiving holidays. This may well stretch to the weekend as Turkey-stuffed US traders may extend their time off to Friday too. Treasury yields rose slightly on Wednesday. The 2Y yield went up 2.7bp to 4.95%, while the 10Y yield barely rose, going up just 1.2bp to 4.404%. EURUSD retraced some of its recent rises, dropping back to 1.0887. The AUD was also slightly softer, at 0.6542, and Cable had a sharp dip in late trading, before partially recovering to 1.2493. The JPY crept higher and is back up to 149.49 now. Other Asian FX pairs were also mostly weaker against the USD. The KRW, IDR and TWD were between -0.49% and -0.87% softer. USDCNY was 0.33% weaker, and moved back up to 7.1648. US stock markets had a modestly positive day, with both the S&P 500 and NASDAQ rising a bit more than 0.4%. Chinese stocks were flat to down. The Hang Seng was unchanged on the day. The CSI 300 fell 1.02% and is down 8.45% year-to-date. G-7 macro:  It was not a particularly exciting day for Macro on Wednesday. The US Durable goods orders numbers came in softer than had been expected. But there was some better news from the University of Michigan consumer sentiment survey, although the inflation expectations surveys it contains were a bit higher than had been expected. US jobless claims also dropped, following their recent jump, which now looks as if it was just noise. The UK Chancellor, Jeremy Hunt, delivered a GBP21bn stimulus to the UK economy in his Autumn Statement yesterday, estimated to deliver a 0.3pp boost to GDP growth over the coming 5 years. The boost was more than had been expected and has raised concern that the Bank of England may not ease next year as soon or as fast as had previously been imagined. Today we get some preliminary PMI data out of the Eurozone. Singapore: October inflation is set for release today.  Inflation is expected to pick up to 4.5%YoY (from 4.1% previous) for headline while core inflation could move higher to 3.1%YoY (from 3.0% previous).  Although price pressures have moderated over the past few months, core inflation remains above the MAS' inflation target which suggests they could extend their current policy stance well into 2024.      Indonesia:  Bank Indonesia (BI) meets to discuss policy today.  Although BI is tipped to keep rates unchanged, IDR slipped by roughly 0.9% yesterday, which could provoke a surprise rate hike from BI.  BI was also expected to pause at their October meeting but substantial pressure on the IDR the day ahead forced Governor Warjiyo to hike rates to 6%. We would not rule out a rate hike if pressure on IDR persists today.  What to look out for: Bank Indonesia policy meeting and Singapore inflation Singapore CPI inflation (23 November) Bank Indonesia policy (23 November) Japan CPI inflation (24 November) Singapore industrial production (24 November)
Crude Oil Eyes 200-DMA Amidst Positive Growth Signals and Inflation Concerns

Soft Australian 3Q23 GDP and Moody's Negative China Outlook Shape Market Sentiment

ING Economics ING Economics 12.12.2023 12:36
Asia Morning Bites Australian 3Q23 GDP comes in soft; Moody's negative China outlook will likely dominate risk sentiment today. Taiwan CPI out later.   Global macro and markets Global markets:  US Treasury markets continued to rally on Tuesday, helped by declines in Eurozone bond yields as one of the ECB’s more hawkish board members (Isabel Schnabel) noted that further hikes were “unlikely”. US yields were then given an additional downward push by some soft JOLTS job opening figures. 2Y Treasury yields fell 5.9bp to 4.577%, while 10Y yields fell 8.8bp to 4.165%. The slightly bigger falls in Eurozone bond yields helped EURUSD to decline to 1.0793 and that has also led AUD to decline to 0.6553, Cable to drop to 1.2593, while the JPY stayed fairly steady at 147.18. As the EURUSD move has more to do with EUR weakness than USD strength, these G-10 moves look unnecessary, and a case could probably be made for these other currencies to appreciate against both the EUR and USD, especially those where rate cuts are not on the agenda (JPY) or will be later and probably less than in the US (AUD). The KRW also weakened on Tuesday, rising back to 1311.20. The IDR was also softer at 15505, as were most of the other Asian FX pairs. There may be a bit of further weakness today, though for the same arguments as for the G-10, the rationale for this is quite weak, and we wouldn’t be totally surprised to see this go the other way. Equities didn’t know which way to turn yesterday, given the weak labour demand figures but the lower bond yields, and the S&P 500 ended the day virtually unchanged. The NASDAQ made a small gain of 0.31%. Chinese stocks were battered by the outlook shift to negative from Moody’s, which pointed to the rising debt levels and higher deficits China is adopting to try to underpin the property sector. Though the decision on Evergrande’s winding up was postponed until January, which could have provided some relief. The Hang Seng fell 1.91% and the CSI 300 fell 1.90%.   G-7 macro:  As mentioned, the JOLTS job openings data showed a large decrease in vacancies, to 8733K in October (for which we already have non-farm payroll data) from 9553K in September. The service sector ISM index was actually a little stronger than in October, rising to 52.7 from 51.8, and the employment subindex rose to 50.7 from 50.2, though this has little correlation with month-on-month directional payrolls trends. After a rare “hit” with its weak reading last month, attention may revert back to the ADP employment data later today.  A 130K  increase is the latest consensus estimate. The consensus for Friday’s non-farm payrolls is higher at 187K, with an unchanged unemployment rate of 3.9%. Outside the US, German factory orders and Eurozone retail sales are the main releases, along with a Bank of Canada rate decision (no change expected to the 5% policy rate).   Australia: 2Q23 GDP slowed from a 0.4%QoQ pace in 2Q23 to only 0.2% in 3Q23, weaker than the 0.5% consensus estimate (ING f 0.3%). A more negative contribution to GDP from net exports in data revealed yesterday was the main clue that the figure was going to undershoot. Yesterday’s RBA no change statement showed no additional sign that the RBA is done hiking rates and merely repeated the previous language. Today’s GDP data slightly increases the probability that rates have peaked – however.   Taiwan:  November CPI inflation should show a further moderation, dropping to 2.80% from 3.05% in October. We don’t see this having any impact on the central bank’s policy rates for the time being though.   What to look out for: Australia GDP and US jobs numbers Australia GDP (6 December) Taiwan CPI inflation (6 December) US ADP employment and trade balance (6 December) Australia trade (7 December) China trade (7 December) Thailand CPI inflation (7 December) US initial jobless claims (7 December) Japan GDP (8 December) India RBI meeting (8 December) Taiwan trade (8 December) US NFP (8 December)
Political Developments Shape CEE Market Landscape: Hungary's Surprising Hawkish Turn, Poland's Government Tensions, and EU Summit Accor

Taiwan Election Fallout, Global Market Movements, and Key Economic Events Ahead

ING Economics ING Economics 16.01.2024 12:00
Asia Morning Bites China 1Y MLF rates and Indonesia trade data are due today. Markets are digesting the Taiwan election results..   Global macro and markets Global markets:  US Treasury yields lurched lower again on Friday, and with little on the data calendar, this was probably a reaction to Middle East developments as well as perhaps some precautionary positioning ahead of Taiwan’s election. 2Y yields fell 10.1bp, and fell to 4.144%. There was less movement at the back end. 10Y yields fell just 2.7bp to 3.939%. Raphael Bostic suggested that further progress on reducing inflation was likely to be slow and cautioned against cutting rates too early. EURUSD hasn’t responded yet to the lower yield environment and edged a bit lower to 1.0947, which is consistent with a market that has become more risk-averse. G-10 currencies were not much changed. The AUD lost a little ground. But Cable is fractionally higher, and the JPY is also a little stronger at 145.03. The APAC region has also not shown much movement outside some weakness of the VND. USDCNY is currently at 7.1675. US equities had another flat day on Friday. Both the S&P 500 and NASDAQ were more or less unchanged.  Chinese stocks were slightly lower. The Hang Seng and CSI 300 both fell 0.35%.   G-7 macro:  Friday was pretty quiet on the macro front within the G-7. UK activity data was quite mixed, but there was a slightly better set of trade figures which may have helped sterling a little. US PPI for December was a little lower than expected which may have helped to encourage bond yields lower. Today there is nothing of note from the G-7.   Taiwan: As noted earlier, Taiwan re-elected a DPP President, and William Lai Ching-te was elected to the top job marking a third consecutive term for a DPP Presidency. Turnout was good, at 72% and President Lai received just over 40% of the vote. The more China-friendly KMT party got 33.49% of the vote, and the TPP got 26.45% of the vote.  It wasn’t all good news for the DPP though. The Legislative Yuan (parliament), which the DPP held in a narrow majority of its 113 members before the election, dropped to 51 seats, one less than the KMT, with the TPP picking up three seats taking their total to 8. This will make it harder for the DPP to pass new policies. Besides some slightly provocative language from both sides of the Strait of Taiwan, there don’t appear to be any reports of anything more tangible as yet.   China: Ahead of the activity data deluge later this week, China decides on its 1Y MLF rates today. Even though the CNY is still looking quite soft at 7.16-7.17, the consensus has pencilled in a 10bp cut of the rate from 2.5% to 2.4%. This follows some soft money supply figures at the end of last week.    Indonesia: Indonesia reports trade figures today. Exports will likely remain subdued because of soft global demand but imports are tipped to show a modest gain due to capital goods imports. This should keep the trade balance in surplus, though the market consensus has the surplus slipping to roughly $1.9bn. A smaller trade surplus would mean less support for the currency which could prompt BI to hold rates at 6% for longer.   What to look out for: China lending rate and Indonesia trade China new loans CNY (9-15 January) Japan M3 and tool orders (15 January) China medium-term lending rate (15 January) Indonesia trade data (15 January) India trade data (15 January) Philippines remittance data (15 January) Australia Westpac consumer confidence (16 January) Japan PPI inflation (16 January) US empire manufacturing (16 January) Singapore NODX (17 January) China GDP, industrial production, retail sales (17 January) Indonesia BI policy (17 January) US retail sales, industrial production and the Fed’s beige book (17 January) Fed’s Waller speaks (17 January) Japan core machinery orders (18 January) Australia labor data (18 January) Japan industrial production (18 January) US initial jobless claims, housing starts and building permits (18 January) Fed’s Williams and Bostic speak (18 January)
National Bank of Romania Maintains Rates, Eyes Inflation Outlook

Asia Morning Bites: BoJ Policy Decision and Singapore Inflation in Focus

ING Economics ING Economics 25.01.2024 12:29
Asia Morning Bites The Bank of Japan (BoJ) meets to decide on policy today and is widely expected to retain its yield curve control (YCC) policy. Singapore will report CPI inflation while South Korea will release data on PPI inflation.   Global Macro and Markets Global markets:  Monday was a quiet day for US Treasuries. The 2Y UST yield rose 0.7bp while the 10Y yield fell slightly by 1.7bp to 4.105%. The USD made slight gains against the EUR, taking EURUSD down to 1.0881. The AUD was also weaker, falling to 0.6566, though both Cable and the JPY held their ground. Asian FX was mostly a shade weaker against the USD. The PHP and THB propped up the bottom of the table. At the other end, the TWD made small gains taking it to 31.344. US stocks clawed their way higher with a new record for the S&P 500 of 4850 after a modest 0.22% gain. The NASDAQ also made a slight gain of 0.32%. US equity futures don’t seem to have a strong view on today’s open. Chinese stocks had another bad day. The Hang Seng fell 2.27% while the CSI 300 fell 1.56%. G-7 macro:  There was nothing of note in the G-7 macro calendar yesterday, and there isn’t much going on today either. UK public finance data precedes the US Richmond Fed business survey. The Bank of Japan is also meeting (see more below). Japan:  Most forecasters expect that the Bank of Japan (BoJ) will maintain its ultra-loose monetary policy today. Consequently, the market’s attention will be focused on what Governor Ueda thinks about inflation and wage growth and whether he will give any hints of policy change in the near future. The market will probably be disappointed again because we don’t believe that Ueda will give a clear signal of policy normalization in the near future. He may, however, sound more dovish than in the past, given the recent slowdown in inflation. The government renewed its utility subsidy program, so we expect the BoJ to revise down its FY2024 inflation outlook in today’s quarterly macro-outlook report. Singapore: December inflation is set for release today.  The market consensus points to inflation dipping to 3.5% YoY (from 3.6% previously) while core inflation may inch lower to 3.0% YoY from 3.2% YoY in November. Despite the slight deceleration, the MAS is widely expected to retain policy settings at the 29 January meeting, remaining wary of potential flare-ups in inflation while also looking to support an economy facing a challenging global trade environment.   What to look out for: BoJ decision and Singapore inflation South Korea PPI inflation (23 January) Singapore CPI inflation (23 January) Australia business confidence (23 January) Taiwan industrial production (23 January) BoJ policy meeting (23 January) US Richmond Fed manufacturing index (23 January) Australia Westpac leading index (24 January) Japan trade balance and Jibun PMI (24 January) Malaysia BNM policy (24 January) US MBA mortgage applications (24 January) South Korea GDP (25 January) Japan department sales (25 January) ECB policy meeting (25 January) US GDP, durable goods orders, initial jobless claims, new home sales (25 January) Japan Tokyo CPI inflation (26 January) Philippines trade (26 January) Singapore industrial production (26 January) US PCE deflator, pending home sales and personal spending (26 January)
Hawkish Notes and Global Markets: An Overview

Hawkish Notes and Global Markets: An Overview

Ipek Ozkardeskaya Ipek Ozkardeskaya 25.01.2024 12:37
Say something hawkish, I'm giving up on you By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The week started on a positive note on both sides of the Atlantic Ocean. Equities in both Europe and the US gained on Monday. The tech stocks continued to do the heavy lifting with Nvidia hitting another record. The positive chip vibes also marked the European trading session; the Dutch semiconductor manufacturer ASML regained its status as the third-largest listed company in Europe, surpassing Nestle, thanks to an analyst upgrade.  Moving forward, the earnings announcements will take the center stage, with Netflix due to announce its Q4 results today after the bell. The streaming giant expects to have added millions more of new paid subscribers to its platform after it scrapped password sharing last year.   Away from the sunny US stocks, the situation is much less exciting for China. Right now, the CSI 300 stocks trade near 5-year lows and Chinese stocks listed in Hong Kong are trading with the deepest discount to the mainland peers in 15 years, as the Chinese interventions are said to be less felt in Hong Kong than in the mainland. Today, though, the Chinese stocks are better bid because Chinese Premier Li Qiang called for more effective measures to stabilize the slumping Chinese stocks, but the truth is, investors left Chinese stocks because of the ferocious government crackdown on most loved Chinese companies. Nothing less than drastic financial support would be enough to bring investors back.  The Japanese stocks continue to be the bright spot among the Asian equity markets. The Bank of Japan's (BoJ) negative interest rates, the cheap yen and the positive outcomes of the tech war between the US and China have been pushing the Japanese Nikkei index to multi-decade highs, and these factors are not ready to reverse just yet. Today, the BoJ didn't only announce that it would keep the interest rates unchanged at -0.10% and the upper band for the 10-yer yield steady at 1%, but the bank lowered its inflation forecasts citing the decline in oil prices. We haven't heard the BoJ presser at the time of writing but lowering inflation forecast highlights that there is no emergency to make any changes to the BoJ policy, even less so after a powerful earthquake hit the island at the very beginning of the year. On the contrary, if inflation – which is the bad side of low rates – is under control, the bank would do better to keep the rates low and its economy supported. As such, the USDJPY remains bid above the 148 level after the BoJ decision and before the post-decision presser. The long yen trade looks much less appetizing today than it did by the end of last year. Yet going short the yen is a risky option considering the rising risk of a verbal intervention when the USDJPY approaches the 150 level. Therefore, the USDJPY will likely waver between the 145/150 range, until there is more clarity about the timing of the BoJ normalization.   Elsewhere, the day is expected to unfold slowly. Investors will monitor the Richmond manufacturing index and await Netflix's earnings release. Additionally, attention is on Donald Trump, who has gained favoritism after Ron DeSantis withdrew his support and endorsed Mr. Trump for this year's presidential race. The potential impact of a Trump victory on financial markets is challenging to quantify; he may adopt a tougher stance on China, implement tax cuts, and increase spending, leading to mixed effects.   For those who missed out on the meme stock frenzy, it's however intriguing to observe Trump's special-purpose acquisition company, DWAC, which surged nearly 90% yesterday.  

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