Thursday 11th July: Asian markets rise on renewed hopes of Fed’s rate cut

Global Markets:

• Asian Stock Markets : Nikkei up 0.46%, Shanghai Composite up 0.01%, Hang Seng up 0.70%, ASX up 0.39%
• Commodities: Gold at $1422.85 (+0.73%), Silver at $15.27 (+0.31%), Brent Oil at $67.27 (+0.39%), WTI Oil at $60.69 (+0.43%)
• Rates : US 10-year yield at 2.042, UK 10-year yield at 0.766, Germany 10-year yield at -0.318

News & Data:

• (USD) Final Wholesale Inventories m/m 0.40% vs 0.40% expected
• (CAD) Overnight Rate 1.75% vs 1.75% expected
• (GBP) NIESR GDP Estimate -0.10% vs 0.30% previous
• (EUR) German 10-y Bond Auction -0.26|1.2 vs -0.24|1.7 previous
• (GBP) Industrial Production m/m 1.40% vs 1.60% expected
• (GBP) Index of Services 3m/3m 0.30% vs 0.10% expected
• (GBP) Goods Trade Balance -11.5B vs -12.5B expected
• (GBP) Construction Output m/m 0.60% vs 0.40% expected
• (GBP) Manufacturing Production m/m 1.40% vs 2.20% expected
• (GBP) GDP m/m 0.30% vs 0.30% expected
• (EUR) Italian Industrial Production m/m 0.90% vs 0.10% expected
• (EUR) French Industrial Production m/m 2.10% vs 0.30% expected
• (USD) Crude Oil Inventories -9.5M vs -1.9M expected
• (USD) 10-y Bond Auction 2.06|2.4 vs 2.07|3.4 previous
• (GBP) RICS House Price Balance -1.00% vs -12.00% expected
• (AUD) MI Inflation Expectations 3.20% vs 3.30% previous
• (AUD) Home Loans m/m 0.00% vs -0.60% expected

Markets Update:

Asian stocks gained and the dollar drooped on Thursday after Federal Reserve Chair Jerome Powell suggested the U.S. central bank is ready to cut interest rates for the first time in a decade.

In his prepared statement, Powell said that since Fed officials met last month, “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.” Meanwhile, inflation has fallen farther from the Fed’s target. In an appearance before his congressional overseers on Wednesday, Powell confirmed that the U.S. economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war.

Shares rose Thursday in Asia, tracking gains on Wall Street after Federal Reserve Chairman Jerome Powell reinforced prospects of a U.S. interest rate cut later this month. Hong Kong’s Hang Seng jumped 0.7%, while the Shanghai Composite added 0.01% to 2,918.58. In Japan, the Nikkei 225 index climbed 0.46% while Australia’s ASX 200 gained 0.4%. Shares also rose in Taiwan and Southeast Asia.

The 10-year U.S. Treasury yield was at 2.038% after dropping on Wednesday from a three-week high of 2.113% following the Fed chair’s congressional testimony. In commodities, Brent crude brushed a six-week high of $67.27 per barrel. Spot gold rose to $1,426 an ounce, its highest since July 3 as reinforced expectations for a Fed rate cut boosted the non-yielding precious metal.

Upcoming Events:

• t10:00am GMT – (USD) Fed Chair Powell Testifies
• 10:30am GMT – (USD) Natural Gas Storage
• 1:01pm GMT – (USD) 30-y Bond Auction
• 1:30pm GMT – (USD) FOMC Member Quarles Speaks
• 2:00pm GMT – (USD) Federal Budget Balance
• 6:30pm GMT – (NZD) Business NZ Manufacturing Index
• Tentative – (CNY) Trade Balance
• Tentative – (CNY) USD-Denominated Trade Balance
• &more…