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Thursday 1st August 2024: Asia-Pacific Markets Mixed Amid Fed and Regional Data

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Global Markets:
Asian Stock Markets : Nikkei down 2.62%, Shanghai Composite down 0.22%, Hang Seng down 0.23% ASX up 0.28%
Commodities : Gold at $2480.35 (0.37%), Silver at $28.98 (-0.15%), Brent Oil at $81.53 (0.87%), WTI Oil at $78.29 (0.82%)
Rates : US 10-year yield at 4.055, UK 10-year yield at 3.974, Germany 10-year yield at 2.288
News & Data:
(CAD) GDP m/m 0.2% vs 0.1% expected
(USD) ADP Non-Farm Employment Change 122K vs 147K expected
(USD) Employment Cost Index q/q 0.9% vs 1.0% expected
(USD) Federal Funds Rate 5.5% vs 5.5% expected
Markets Update:
Asia-Pacific markets were mixed Thursday following comments from U.S. Federal Reserve Chair Jerome Powell, suggesting a possible rate cut in September if inflation trends remain favorable. Japan’s Nikkei 225 fell 2.49% to 38,126.33, and the Topix dropped 3.24% to 2,703.69, primarily due to losses in real estate stocks and major exporters as the yen strengthened. A stronger yen decreases the competitiveness of Japanese exports, and higher borrowing costs negatively impact real estate companies.
On Wednesday, the Bank of Japan raised its benchmark interest rate to “around 0.25%,” its highest since 2008. The yen strengthened 0.9% to 148.61 against the dollar after dropping below 150. Japan’s finance ministry reported spending 5.53 trillion yen ($36.8 billion) on foreign exchange intervention from June 27 to July 29. Toyota saw a 12.2% revenue increase to 11.84 trillion yen ($79.05 billion) and a 16.7% rise in operating income to 1.31 trillion yen for its first quarter, with net income up 2.8% year-on-year to 1.33 trillion yen. However, its shares fell 8.29%.
The Federal Reserve’s meeting concluded with the federal funds rate unchanged at 5.5%. Powell indicated that a rate cut is not guaranteed and dismissed the possibility of a 50-basis-point reduction. Australia’s S&P/ASX 200 reached new highs, gaining 0.28% to 8,114.7. South Korea’s Kospi rose 0.25% to 2,777.68, while the Kosdaq increased 1.29% to 813.53. Preliminary data showed South Korean exports grew 13.9% year-on-year to $57.49 billion in July.
Hong Kong’s Hang Seng index was down 0.23%, and the CSI 300 in mainland China fell 0.66% to 3,419.27. Hong Kong’s GDP rose 3.3% year-on-year in Q2, surpassing expectations. China’s factory activity contracted in July, with the manufacturing PMI at 49.8, below the expected 51.5.
Upcoming Events:
12:30 PM GMT – USD Unemployment Claims
2:30 PM GMT – USD ISM Manufacturing PMI
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