Spreadex Market Update
China's Property Woes Weigh on Markets, US Stocks Rally
Global markets grappled with the shadow of China's housing turmoil while US equities showed resilience, Treasury yields inched higher, bolstering the dollar index to a one-month high.
Key Factors for Today
- China's Property Crisis Casts a Pall Over Markets
- US Inflation Shows Moderation Yet Remains Elevated
- Japan's Surging GDP Outshines Lacklustre Domestic Demand
- PBOC Surprises Markets with Easing Measures
- RBA Minutes Reveal Confidence in Subdued Inflation
Market Movers
- NY Fed Survey indicates Inflation's Slowdown
- Japan's GDP Surpasses Forecasts, USD/JPY Ascends
- PBOC Eases Policy Amidst Dismal Retail Sales
- RBA Minutes Influence AUD/USD Movement
Economic Calendar
- UK Jobs Report
- EA ZEW and German ZEW Economic Sentiment
- Canada's Inflation Rate
- US Retail Sales and Trade Balance
- NY Empire State Manufacturing Index
- NAHB Housing Market Index
- Speech by Fed's Kashkari
- API Crude Oil Stock Change
The Big News:
China's Property Quandary Casts a Long Shadow
Markets across Asia confronted the unsettling predicament of China's beleaguered property developers, prompting declines in regional indices. In a surprising move, the People's Bank of China (PBOC) intervened to assuage fears, slicing the Medium-Term Lending Facility (MLF) by 15 bps and the Reserve Requirement Ratio (RRR) by 10 bps. Simultaneously, CNY401B was infused into the MLF, effectively enacting a rate cut through quantitative easing. These decisive actions aimed to temper concerns as rumours of impending market disturbance loomed. The yuan's ascent to November highs at 7.3 demonstrated cautious optimism, though a corridor between 7.37 and 7.26 remained open.
US Inflation Moderates, Yet Lingers Above Present Levels
The New York Federal Reserve's Survey of Consumer Expectations revealed a dip in projected inflation to 3.5% for the next year, signifying a decrease from the prior survey's 3.8%. While this suggests some moderation, inflation remains elevated beyond current rates. The overarching sentiment of "higher-for-longer" persists, despite market anticipation of an early 2024 Federal Reserve cut. This trend facilitated the dollar's ascendancy, causing gold to slip to $1900/oz and potentially breach the $189/oz threshold. On the flip side, a buoyant bounce around round support could offer temporary solace towards $1915/oz.
Japan's GDP Triumphs Amidst Domestic Demand Doldrums
In an impressive display, Japan's Q2 GDP growth nearly doubled estimates, clocking in at 1.5%, while the annual rate soared to 6.0%, surpassing the projected 2.9%. This robust expansion, however, remains juxtaposed against a lacklustre domestic consumption demand, potentially motivating the Bank of Japan (BOJ) to maintain its ultra-easing stance. USD/JPY embarked on its sixth consecutive day of gains, eyeing November highs at 146.39 and holding above 145. A reversal could trigger support at 144.20.
RBA Stays the Course Amidst Ebbing Inflation
The Reserve Bank of Australia (RBA) grappled with the decision between a quarter-point hike and a hold, ultimately opting for the latter due to receding inflation. While anticipating slow economic growth in the coming months, RBA members conceded the potential necessity of future rate hikes. AUD/USD's rollercoaster ride saw a tumble to a November low of $0.6450 before a partial recovery, ending the day in red. Tuesday's price action hints at positive prospects as bulls strive to reclaim the 65-cent threshold.
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