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Markets Update: Mixed Start in Asia Mirrors US as Earnings, Hawkish BoJ, and China Pledges Digest; ASX Stagnant, Nikkei Falters, China Choppy Amid Mixed Asian Market Performance.
Economic Calendar
Global Markets Roundup: 24 Jan 2023
APAC equities followed suit with a mixed performance on Wednesday, mirroring the lead from US markets amid a confluence of factors. Investors wrestled with a mix of corporate earnings releases, recent hawkish comments from the Bank of Japan, and pledges of support from China. Netflix Outperforms with Q4 Beat, Boosting US Sentiment: In a bright spot, Netflix Inc. (NFLX) surpassed expectations with its Q4 2023 results, exceeding both earnings and revenue forecasts. Streaming subscriber growth also outpaced estimates, sending the company's shares soaring 8.7% in after-hours trading. This positive news helped buoy overall US sentiment, although it remains to be seen if the momentum will carry over to Asian markets. European Futures Hint at Rebound: After a slight dip on Tuesday, European equity futures point towards a higher open with the Euro Stoxx 50 future up 0.8%. This suggests cautious optimism for a potential turnaround after the European Central Bank's recent hawkish tilt sparked some market jitters.
APAC markets lacked a clear direction on Wednesday, with gains in commodity-linked sectors battling losses in financials, tech, and defensives on the ASX 200. Japan's Nikkei 225 suffered under the double whammy of rising yields and a hawkish tilt from BoJ Governor Ueda, who hinted at a potential policy shift away from ultra-loose monetary accommodation. Across the Strait, Hong Kong's Hang Seng outperformed, buoyed by recent pledges of support from Chinese authorities. The mainland's Shanghai Composite, however, witnessed choppy trade. An initial rally fizzled after the People's Bank of China (PBoC) continued its liquidity mop-up through open market operations (OMOs), before a modest rebound later in the session.
ASX Stalemate: Despite commodity-related sectors like energy and materials pushing higher, losses in financials, tech, and defensive plays like healthcare kept the ASX 200 rangebound. The index ended the day near flat. Nikkei Stumbles: The Nikkei 225 shed over 1% as higher bond yields amplified concerns about rising borrowing costs for Japanese businesses. Ueda's comments further heightened anxieties, suggesting a potential future shift in the BoJ's dovish stance. China's Mixed Bag: Hong Kong's Hang Seng enjoyed relative strength, lifted by hopes of increased government support measures. Conversely, the Shanghai Composite experienced a rollercoaster session, initially climbing with Hong Kong before succumbing to PBoC's liquidity tightening, only to later regain some lost ground.
Currencies: DXY Steady, JPY Shines: The US Dollar Index (DXY) remains confined within a tight range around 103.50, indicating subdued forex markets overall. Meanwhile, the Japanese Yen (JPY) leads the G10 currencies against the dollar, likely benefiting from the BoJ's recent comments hinting at a potential shift towards a more hawkish monetary policy stance. EUR/USD continues its downward trend, slipping further onto the 1.08 handle.
Currencies:
DXY Holds Steady: The US Dollar Index (DXY) found its footing within a narrow range, lacking fresh impetus as markets awaited further direction.
EUR/USD Hesitates: After a recent dive, the Euro struggled to reclaim lost ground against the Dollar, despite trading above its worst levels of the previous day.
GBP/USD Tests Resistance: The Pound Sterling edged towards the 1.2700 mark against the Dollar, but trading remained subdued ahead of key Purchasing Managers' Index (PMI) data.
USD/JPY Retreats: Hawkish BoJ comments and strong Japanese trade data triggered a modest Yen appreciation, pushing USD/JPY below the 148.00 level.
AUD and NZD Wobble: Mixed risk appetite and in-line New Zealand CPI data kept the Antipodeans volatile.
PBoC Adjusts CNY Midpoint: The People's Bank of China (PBoC) further weakened the Renminbi by setting the USD/CNY midpoint lower than expectations.
SNB Eyes Rent-Driven Inflation: Swiss National Bank (SNB) Chair Thomas Jordan acknowledged potential inflationary pressure from rents, while reiterating concerns about the Franc's appreciation harming Swiss companies.
Commodities:
Crude Contained: Oil prices remained subdued after yesterday's choppy session and mixed private sector inventory data.
Gold Rangebound: The precious metal found no clear direction, trapped within a tight range amid an uneventful Dollar and lack of major catalysts.
Copper Edges Higher: Chinese stimulus hopes provided a slight tailwind for copper futures, pushing them into positive territory.
Fixed Income:
US Treasuries Rebound: US 10-year Treasury futures clawed back some losses after a recent bear steepening and a relatively smooth 2-year auction.
Bunds Recover: German Bund futures bounced back from the previous day's slump, reclaiming the 134.00 level despite upcoming German bond supply.
JGBs Extend Decline: Japanese 10-year Government Bond (JGB) futures suffered further losses as the 10-year JGB yield climbed on hawkish-leaning BoJ Governor Ueda's comments and stronger-than-expected Japanese trade data.
Economic Data and Earnings in Focus: The economic calendar for Wednesday is packed with key data releases, including Purchasing Managers' Indices (PMIs) from France, Germany, the Eurozone, the UK, and the US. The Bank of Canada's monetary policy announcement will also be closely watched, potentially impacting currency markets. On the earnings front, major reports are expected from SAP, ASML, Abrdn, AT&T, Tesla, and IBM.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team