Article / 25 July 2016 at 7:00 GMT

Morning Markets: Asian equities fizzle, USD stays firm

Consulting editor / TradingFloor

MM Table Monday



  • Japan: Provisional trade statistics, exports, imports, trade balance (published)
  • Singapore: CPI  (published)
  • Germany: Ifo business climate index (0800 GMT)
  • Brazil: FGV consumer confidence index (1100 GMT) 
  • US: Dallas Fed manufacturing index (1430 GMT) 

Friday's record-high close for the S&P 500 initially carried through to Monday in Asia-Pacific equity markets, but the rally largely fizzled towards the end of the Asian trading day. Japan's Nikkei 225 index returned to flat after starting out higher on positive trade data and expectations of monetary stimulus, and China's Shanghai Composite index also erased its initial gains and dipped.

In Australia, investors rushed into shares in grocery giant Woolworths after the group announced a major restructuring aimed at winning back market share lost to rivals such as German-owned Aldi in recent years.

The dollar remained firm in the Asian session.

US telecom operator Verizon is expected to announce a deal on Monday to acquire Yahoo for about $5 billion, according to media reports based on sources familiar with the matter.

The main event of the trading week is the Federal Open Markets Committee meeting that ends on Wednesday. Investors see an 8% chance of a hike and a 25% chance in September.

Market signals

Asian session

  • Japan's trade balance turned positive in June although imports and exports fell
  • Japan's adjusted trade balance was ¥335 billion
  • 32 of 41 analysts surveyed by Bloomberg expect the BoJ to expand monetary stimulus
  • The move is expected to come at the BoJ's two-day meeting ending on July 29
  • Nikkei 225 was flat, up by just 0.02% to 16,630.45 at 0537 GMT
  • Shanghai Composite was also little changed, up 0.2% to 3,018.77 at 0519 GMT
  • Beijing ordered online companies to stop reporting original news: Bloomberg
  • China is trying to tighten its grip over the country’s web and information industries
  • Hong Kong's Hang Seng was down 0.26% to 21,907.82 at 0529 GMT
  • India's S&P BSE Sensex was up 0.11% to 27,834.01 at 0536 GMT
  • Australian retail giant Woolworths announced job cuts, as part of a $1 billion restructure
  • The retailer's share price soared on the news, up 8.37% at 0451 GMT
  • ASX headed higher on widespread gains, apart from the resources sector
  • S&P/ASX200 was up 0.68% to 5,535.80 at 0517 GMT

Forex ahead

  • US dollar lost ground against the yen; it was worth ¥106.3390 at 0504 GMT
  • Australian dollar headed slightly higher, but failed to break through 0.75
  • Aussie dollar was worth 0.7477 at 0506 GMT

From the Floor

Gentle hawks. ”Expectations for this week’s FOMC are for a midly hawkish message,” says Hardy.

Earnings jamboree. ”It’s a monster week in terms of earnings,” says Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Today's Ifo numbers for Germany will be keenly watched to help clear up the mixed messages emanating from two earlier surveys, writes James Picerno.

Asian revival
Asia is riding high on positive US share prices and hopes for stimulus in Japan, but is the "helicopter money" more hope than expectation, asks Saxo's Singapore team. 

Rate nudge
The Fed might try to talk up rate-hike expectations a little at its Wednesday FOMC meeting, so that a September rise would not come as a complete surprise, writes John J Hardy.

Rouble rumblings
The Russian rouble might have become too strong, and interest rates might need to come down sharply when the central bank's board of directors meets on July 29, says Nadia Kazakova.

Easing expected
Monetary accommodation is still "trump", and more easing can be expected, for instance from the Bank of England, says Neil Staines.

US Federal Reserve

The Federal Open Market Committee's meeting on July 26-27 will be the 
centrepiece of the trading week. Photo: iStock

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