Tuesday 14th August: Asian Markets attempt Recovery; China Data disappoints

IC Markets Market Review
IC Markets Market Review

Global Markets:

  • Asian Stock Markets : Nikkei up 1.75%, Shanghai Composite down 0.50%, Hang Seng down 0.83%, ASX up 0.78%
  • Commodities : Gold at $1202.20 (+0.28%), Silver at $15.05 (+0.42%), Brent Oil at $72.83 (+0.30%), WTI Oil at $67.48 (+0.42%)
  • Rates : US 10-year yield at 2.886, UK 10-year yield at 1.263, Germany 10-year yield at 0.313

News & Data:

  • (CNY) Industrial Production y/y 6.00% vs 6.30% expected
  • (CNY) Fixed Asset Investment ytd/y 5.50% vs 6.00% expected
  • (AUD) NAB Business Confidence 7 vs 6 previous
  • Trump signs $717 bil. defense spending bill
  • Euro on defensive as lira, EM currencies seen vulnerable
  • U.S. economy seen strong in 2018, to slow in 2019: CBO

Markets Update:

Asian stock markets, led by Japan, are mostly higher on Tuesday as worries about Turkey eased slightly after the country’s central bank took measures to boost liquidity in the foreign exchange market. Nevertheless, investors turned cautious after China’s retail sales, industrial production and fixed asset investment rose less than expected in July.

Investors had been encouraged that falls on Wall Street were only minor overnight. The Dow ended Monday down 0.5 percent, while the S&P 500 lost 0.40 percent and the Nasdaq 0.25 percent. The Japanese market is notably higher after touching a one-month low in the previous session amid worries about the financial crisis in Turkey. In addition, a weaker yen lifted exporters’ shares.

Elsewhere, South Korea’s Kospi edged higher by 0.4 percent. Tech names were a mixed bag. Greater China markets, however, declined. Retail sales, industrial output and urban investment all grew by less than forecast in July, a trifecta of disappointment that underlined the need for more policy stimulus in China. Hong Kong’s Hang Seng Index erased more than three quarters of a percent. The Shanghai Composite edged lower by half a percent.

For now, concerns about the exposure of European banks to Turkey pushed up bond yields in Spain and Italy and hobbled the euro. The single currency was last at $1.1405, having touched its lowest since July 2017 on Monday. It also reached one-year lows on the yen and Swiss franc, traditional safe harbours in times of stress.

Against a basket of currencies, the dollar was a shade softer at 96.314. In commodity markets, gold looked to have lost its safe-haven halo and slid to its lowest since late January 2017. It was last down at $1,1194.20 an ounce. Oil prices rose after a report from OPEC confirmed that top exporter Saudi Arabia had cut production to avert looming oversupply.

Upcoming Events:

  • 07:00 AM GMT – (EUR) German Prelim GDP q/q
  • 09:30 AM GMT – (GBP) Average Earnings Index 3m/y
  • 09:30 AM GMT – (GBP) Claimant Count Change
  • 09:30 AM GMT – (GBP) Unemployment Rate
  • 10:00 AM GMT – (EUR) Flash GDP q/q
  • 10:00 AM GMT – (EUR) German ZEW Economic Sentiment


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