Slow Market Movement Amidst Mixed Global Indices

Equities and yields experienced a subtle upward drift today, with global indices displaying a mixed performance.

Key Factors for Today

• Gold's ascent attributed to PBOC's rate decision disappointment.
• Italy's hopes for relaxed EU debt requirements; ECB rate hike expectations persist.
• BOJ Governor and PM discuss policy, excluding FX volatility.
• Crude prices fluctuate due to storm concerns, ending slightly lower.
• Natural gas spikes due to Australian workers' strike threat at LNG facility.

Market Movers

• Equities and yields see a gentle rise on soft US landing narrative.
• Benchmark 10-year yield crosses 4.3%, marking a 15-year high.
• Big tech stocks gain traction ahead of Nvidia's AI-driven earnings, supporting Nasdaq.

Economic Calendar

• CBI Industrial Trend Orders
• Fed Barkin Speech
• Existing Home Sales
• Fed Goolsbee Speech
• Fed Bowman Speech
• API Crude Oil Stock Change
• Judo Bank PMIs
• BRICS Summit

The Big News

Gold Shines Bright Amidst Lingering Chinese Concerns
The People's Bank of China (PBOC) missed market expectations by implementing a lesser-than-anticipated cut of 10 basis points in the 1-year loan prime rate. In addition, the 5-year loan prime rate remained untouched, causing disappointment across the board. Lingering structural challenges coupled with lacklustre policy responses continue to keep risk appetite at a minimum, bolstering demand for gold. The yellow metal made a notable push towards its next substantial resistance around the $1,900 per ounce mark, leaving behind a support level near $1,885 per ounce, which had acted as a double bottom.

Italy's Hopes for Looser EU Debt Regulations
Giancarlo Giorgetti, Italy's Economy Minister, expressed optimism about the non-return of the EU Stability Agreement (EUSA) in 2024. This sentiment, however, could pave the way for further division between the northern and southern regions of the EU. With the suspension of the deficit-to-GDP cap at 3% due to the pandemic, reactivating the EUSA next year might constrain government expenditure in the periphery and cast a shadow on the shared European economy. Meanwhile, expectations for another European Central Bank (ECB) rate hike endure. The Eurodollar's upward trajectory away from its recent support below $1.0850 signals a break in its nine-day losing streak. Should this momentum persist, the currency pair might encounter resistance near the round $1.0950 level.

BOJ Governor's Meeting and FX Outlook
Reports confirm a meeting between BOJ Governor Kazuo Ueda and Prime Minister Fumio Kishida, focusing on policy explanations but sidestepping discussions on foreign exchange volatility. This meeting takes place in anticipation of a possible market intervention by the BOJ, following instructions from the Ministry of Finance, as the yen remains relatively weak. Ueda's involvement in the upcoming Fed's Jackson Hole Symposium further underscores the importance of this meeting. The USD/JPY has surged towards its multi-month peak, nearing resistance below ¥145.50. Its trading range, supported by a weak foundation at ¥145.00, remains susceptible to a dip towards ¥144.40 if corrective pressures mount.

Stormy Impact on Crude Prices
With multiple storm systems brewing in the North Atlantic, crude oil prices experienced fluctuations throughout the day. While Tropical Depression Nine is projected to intensify into a storm and make landfall on the southern coast of Texas, oil refineries and offshore platforms continue to operate. WTI managed to remain above the $80 per barrel mark despite a 1.50% dip, with potential price targets at $82.20 per barrel on the upside and $79 per barrel on the downside. Meanwhile, European natural gas prices surged due to concerns over Australian LNG facility workers issuing a 7-day strike notice regarding wage disputes.