Monday 6th August: Asian Markets Give Up Early Gains; China Swings to Red

IC Markets Market Review
IC Markets Market Review

Global Markets:

  • Asian Stock Markets : Nikkei down 0.09%, Shanghai Composite down 0.83%, Hang Seng up 0.54%, ASX up 0.49%
  • Commodities : Gold at $1222.50 (-0.06%), Silver at $15.44 (-0.14%), Brent Oil at $73.19 (-0.03%), WTI Oil at $68.64 (+0.22%)
  • Rates : US 10-year yield at 2.953, UK 10-year yield at 1.330, Germany 10-year yield at 0.408

News & Data:

  • (USD) ISM Non-Manufacturing PMI 55.7 vs 58.6 expected
  • (USD) Unemployment Rate 3.90% vs 3.90% expected
  • (USD) Non-Farm Employment Change 157K vs 191K expected
  • (USD) Average Hourly Earnings m/m 0.30% vs 0.30% expected
  • (CAD) Trade Balance -0.6B vs -2.3B expected
  • (GBP) Services PMI 53.5 vs 54.7 expected
  • Computer virus cripples top Apple supplier TSMC
  • NZ Treasury warns drop in confidence and cooling housing market pose risks for Govt coffers
  • Stable renminbi foreseen on Chinese central bank move

Markets Update:

Asian shares pared gains on Monday as Chinese stocks swung into negative territory, driven lower by the escalating Sino-U.S. trade war, though Beijing’s efforts to stop sharp declines in the yuan helped support the currency. The U.S. Labor Department’s report showed that non-farm payroll employment climbed by less than expected in July, while the unemployment rate edged down slightly and matched economist estimates. The data reinforced expectations of gradual interest rate hikes by the U.S. Federal Reserve.

The Nikkei 225 pared some moderate gains seen earlier to trade just 8bps lower. Gains in the iron and steel as well as telecommunications sectors were offset by declines in most other sectors, including banks and miscellaneous product makers. Chinese shares turned negative with the blue-chip share index and Shanghai’s SSE Composite down 0.9 percent each. Over in Hong Kong, the Hang Seng Index rose 0.5 percent after closing lower for the past five straight sessions. All sectors traded higher in the morning, with the advance led by around 1 percent gains in information technology, conglomerates and financials. The Australian stock market is advancing following the gains on Wall Street and as a rise in metal prices boosted mining stocks. The major miners are advancing on higher iron ore and copper prices. Gold miners are also gaining after gold prices edged higher.

In foreign exchange, the offshore yuan slightly extended gains made on Friday when the People’s Bank of China moved to stabilize the currency following recent weakness. The dollar index, which measures the greenback against a basket of six other currencies, has risen 3.4 percent so far this year with strong rallies since April when Trump first announced the tariffs. The index was last up 0.15 percent at 95.29. Traders see further upside in the dollar as they maintained a significantly large long position on the currency, while net short bets on the Aussie were their largest since November 2015.

Upcoming Events:

Tuesday, August 7th 2018

  • 05:30 AM GMT – (AUD) RBA Rate Statement
  • 05:30 AM GMT – (AUD) Cash Rate
  • 08:30 AM GMT – (GBP) Halifax HPI m/m
  • 03:00 PM GMT – (CAD) Ivey PMI
  • Tentative – (NZD) GDT Price Index

Wednesday, August 8th 2018

  • 04:00 AM GMT – (NZD) Inflation Expectations q/q
  • 04:05 AM GMT – (AUD) RBA Gov Lowe Speaks
  • Tentative – (CNY) Trade Balance
  • 01:45 PM GMT – (USD) FOMC Member Barkin Speaks
  • 03:30 PM GMT – (USD) Crude Oil Inventories
  • 10:00 PM GMT – (NZD) Official Cash Rate
  • 10:00 PM GMT – (NZD) RBNZ Monetary Policy Statement
  • 10:00 PM GMT – (NZD) RBNZ Rate Statement
  • 11:00 PM GMT – (NZD) RBNZ Press Conference

Thursday, August 9th 2018

  • 02:30 AM GMT – (CNY) CPI y/y
  • 01:30 PM GMT – (CAD) NHPI m/m
  • 01:30 PM GMT – (USD) PPI m/m
  • 01:30 PM GMT – (USD) Core PPI m/m
  • 01:30 PM GMT – (USD) Unemployment Claims
  • 11:30 PM GMT – (NZD) Business NZ Manufacturing Index

Friday, August 10th 2018

  • 12:50 AM GMT – (JPY) Prelim GDP q/q
  • 02:30 AM GMT – (AUD) RBA Monetary Policy Statement
  • 09:30 AM GMT – (GBP) GDP m/m
  • 09:30 AM GMT – (GBP) Manufacturing Production m/m
  • 09:30 AM GMT – (GBP) Prelim GDP q/q
  • 09:30 AM GMT – (GBP) Goods Trade Balance
  • 09:30 AM GMT – (GBP) Prelim Business Investment q/q
  • 01:30 PM GMT – (CAD) Employment Change
  • 01:30 PM GMT – (CAD) Unemployment Rate
  • 01:30 PM GMT – (USD) CPI m/m
  • 01:30 PM GMT – (USD) Core CPI m/m

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