Thursday 4th October: Asian Markets lower, US numbers surprisingly strong

IC Markets Market Review
IC Markets Market Review

Global Markets:

  • Asian Stock Markets : Nikkei down 0.66%, Hang Seng down 2.02%, ASX up 0.43%
  • Commodities : Gold at $1202.00 (-0.07%), Silver at $14.64 (-0.24%), Brent Oil at $86.08 (-0.24%), WTI Oil at $76.23 (-0.24%)
  • Rates : US 10-year yield at 3.217, UK 10-year yield at 1.586, Germany 10-year yield at 0.482

News & Data:

  • (AUD) Trade Balance 1.60B vs 1.43B expected
  • (USD) Crude Oil Inventories 8.0M vs 1.1M expected
  • (USD) ISM Non-Manufacturing PMI 61.6 vs 58 expected
  • (USD) ADP Non-Farm Employment Change 230K vs 185K expected
  • (GBP) Services PMI 53.9 vs 54 expected
  • Italy govt targeting GDP growth of 1.5 percent in 2019 – Il Sole 24 Ore
  • Malaysia ex-PM’s wife pleads not guilty to money laundering

Markets Update:

Asian stock markets are mostly lower on Thursday, with some of the markets paring early gains, as stunningly strong U.S. economic data drove 10-year U.S. Treasury yields to their highest level since 2011 and also raised concerns about the outlook for interest rates.

The Japanese market slipped into negative territory after opening higher following the overnight gains on Wall Street and on a weaker yen. Investors are cautious after the surge in U.S. Treasury yields. The Nikkei 225 slid further to trade down by 0.66 percent in the afternoon, while the Topix index slipped by 0.1 percent. The Kospi continued to slide from its earlier losses to trade down by 1.6 percent in the afternoon, following news reports that Bank of Korea Governor Lee Ju-yeol hinted at a possible policy rate hike later in October.

Stocks of South Korea’s cosmetics brands took a hit on the back of weak sentiment about Chinese consumers. Down under, Australia’s ASX 200 outperformed its regional peers and rose 0.4%. A report from Pacific Investment Management warned that the country’s housing slump raised the possibility of debt downgrades for local big banks. Elsewhere, the Reserve Bank of India said in a statement that it is easing norms for state-run refiners including Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. to borrow money from overseas markets,

A Fed hike in December is now put at an 8 in 10 chance, while investors lifted expectations for how high rates may eventually go. Fed fund futures for December 2019 sank to a contract low of 97.12, implying a rate of 2.88 percent. At the start of this year they had looked for only 2.1 percent. In Asia, the Indian rupee and Indonesian rupiah have been under heavy fire, in part because both countries are being squeezed by the soaring cost of imported oil. Oil prices have reached four-year peaks as the market focused on upcoming U.S. sanctions on Iran while shrugging off the year’s largest weekly build in U.S. crude stockpiles.

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