(Ipek Ozkardeskaya – Swissquote Bank Ltd)
US consumer prices eased in July, and they eased more than expected. US yields pulled lower after the CPI print, the US 10-year yield retreated, the US dollar slipped, gold gained, and the US stock markets rallied.
The EURUSD jumped to 1.0370 mark, as Cable made another attempt to 1.2272 but failed to extend gains into the 1.23 mark. And It will likely be hard for the pound sterling to post a meaningful recovery even if the dollar softens more, as there are too much political uncertainties in Britain following Boris Johnson’s resignation.
The sterling is under pressure, but the FTSE100 does just fine, and I will focus on why the British blue-chip companies are in a position to extend gains in this episode.
Elsewhere, Disney jumped on strong quarterly results, Tesla rallied despite news that Elon Musk dumped more stocks to prepare for an eventual Twitter purchase.
Equities track gains on Wall St. amid Japanese holiday, US CPI was softer
Asia Market Update: Equities track gains on Wall St. amid Japanese holiday, US CPI was softer; Fed officials comment on the data; USD rebounds in Asia; US PPI due later today.
– Longfor Group [Chinese property developer] denied rumor related to overdue commercial paper.
– Ex-dividend weighs on Rio Tinto.
– Australian Telecom index rises following results from Telstra.
– US equity FUTs extend gains.
– China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thurs. [Note: US White House has reportedly for now set aside any plans to scrap certain China tariffs or to look into adding more; Biden yet to make any final decision – press].
– China may release bank lending data this week.
– ASX 200 opened +0.2%.
– (AU) Australia Aug consumer inflation expectation: 5.9% V 6.3% PRIOR.
– QBE.AU Reports H1 Cash profit $169M v $467M y/y; Rev $11.54B v $9.13B y/y.
– TLS.AU Reports FY22 (A$) Net 1.69B v 1.86B y/y; Underlying EBITDA 7.3B v 6.7B y/y; Rev 22.05B v 23.1B y/y.
– AMP.AU Reports H1 (A$) underlying net 117M v 181M y/y; Rev 1.11B v 1.30B y/y, to return A$1.1B in capital through FY23.
– (AU) Australia Trade Min Farrell to meet with US Trade Rep Tai on Thursday.
– Nikkei 225 closed for holiday.
– (JP) Japan PM Kishida: Did carry out a Cabinet reshuffle; Open to dialogue with China (yesterday after the close).
– 7267.JP Reports Q1 Net ¥149.2B v ¥222.5B y/y, Op ¥222.2B v ¥243.2B y/y, Rev ¥3.83T v ¥3.58T y/y; To buy back up to ¥100B in shares (1.9% of market cap); Raises outlook for Op profit and Revenues; Exec: Expects chip shortage to last though this fiscal year; May consider Japan price hikes, watching competitors – post earnings comments (yesterday after the close).
– Kospi opened +1.1%.
– (KR) South Korea Aug 1-10 Exports Y/Y: 23.2% v 4.7% prior; Imports Y/Y: 34.1% v 14.1% prior; Chip exports Y/Y: -5.1% v +10.4% prior.
– Hang Seng opened +1.2%; Shanghai Composite opened %.
– 960.HK Denies overdue commercial paper rumor, confirmed it settled the commercial paper without deferring payment.
– (CN) Economic Daily: China will diffuse property risks as well as protect consumers.
– (CN) China PBOC sets Yuan reference rate: 6.7324 v 6.7612 prior.
– (CN) China PBOC Open Market Operation (OMO): Sells CNY2.0B in 7-day reverse repos v CNY2.0B prior; Net CNY0B v Net CNY0B prior.
– (SG) Singapore Q2 FINAL GDP Q/Q: -0.2% V +0.2%E; Y/Y: 4.4% V 4.8%E; Narrows 2022 GDP outlook to 3-4% (prior 3-5%).
– (SG) Singapore Central Bank (MAS) Deputy MD Robinson: Current policy stance remains appropriate; Core CPI to rise a bit in Q3.
– (SG) Singapore Ministry of Trade and Industry (MTI) Yong Yik Wei: Do not expect a technical recession in 2022; Expect slight positive GDP in Q3 and Q4.
– (CN) White House has reportedly for now set aside any plans to scrap certain China tariffs or to look into adding more; Biden yet to make any final decision – press.
– (US) JULY CPI M/M: 0.0% V 0.2%E; Y/Y: 8.5% V 8.7%E (annual pace matches lower end of all analysts’ estimates).
– (US) Treasury Sec Yellen: New funds for the IRS should not increase audits for those who make less than $400K/year.
– (MX) Mexico authorizes emergency measures to transport certain products via train to help against higher cargo costs and inflation.
– (US) Fed’s Daly: Too early to declare victory on inflation, CPI is still far too high; 50bps rate hike in Sept ‘baseline’; Expresses initial support on slower rate increase pace – FT.
– (UK) July RICS House Price Balance: 63% v 60%e (lowest since Feb 2021).
Levels as of 00:15ET
– Hang Seng +1.9%; Shanghai Composite +1.2%; Kospi +1.3%; Nikkei225 closed for holiday; ASX 200 +0.9%.
– Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.4%; FTSE100 +0.2%.
– EUR 1.0305-1.0281; JPY 133.32-132.62; AUD 0.7088-0.7063; NZD 0.6413-0.6385.