Morning Markets: Chinese stocks rebound after Wall St ends record high
Watchlist
- South Africa: CPI (0800 GMT)
- South Africa: Retail sales (1100 GMT)
- US: Housing starts and building permits (1230 GMT)
- US: EIA weekly petroleum status report, incl. crude oil stocks (1430 GMT)
Chinese shares rebounded on Wednesday, extending a recovery from Monday's thrashing, with the Shanghai Composite index gaining 1.2%.
The Chinese recovery was aided by a rally overnight on Wall Street where the Nasdaq and S&P500 ended at new record high closing levels. The Nasdaq has had its longest winning streak since 2015.
Asian bourses were mixed, however, as Hong Kong's Hang Seng rose 0.5%, while Japan's Nikkei was more or less flat as a stronger yen capped gains.
The US dollar remained under pressure, hitting its lowest level against a basket of currencies for a year, and USDJPY slipped below 112. The USD has been hammered this week by the US Senate Republicans' failure to muster a majority to pass their healthcare reform bill, which has cast fresh doubts over the Trump administration's capability to pass other major legislation as well.
Wednesday's macroeconomic data include weekly crude oil inventories from the US Energy Information Administration. The European Central Bank’s policy meeting Thursday is the main scheduled event of the week for financial markets.
Market signals
Asian session
- Global bonds rose as US equities climbed to fresh record highs
- 10-year US Treasury yield down 7 basis points this week to 2.26%
- With global equities hitting highs, investors are assessing earnings results
- Market-implied probability of a Fed hike has slipped to just 40%
- Japan's Nikkei 225 lost mid-morning gains; it was down 0.01% to 19,997.37 at 0508 GMT
- Shanghai Composite rebounded; it was up 0.90% to 3,213.06 at 0600 GMT
- Hong Kong's Hang Seng rebounded too; it was up 0.47% to 26,650.25 at 0529 GMT
- Korea's Kospi Composite gave up early gains; off 0.04% to 2,425.03 at 0510 GMT
- 10-year Australian government bond yield fell three basis points to 2.72%
- Aussie banks said they'll survive new capital ratio of 10.5%, driving a relief rally for banks
- The S&P/ASX200 rebounded; it was up 0.88% to 5,737.50 at 0524 GMT
- Weaker Opec resolve on output curbs and softening China demand may hurt oil prices
- Failure to pass US healthcare reform weighs on the US dollar
Forex ahead
- USD has hit its lowest level against a basket of currencies for a year
- USD was worth just ¥112.0610 at 0510 GMT
- AUD surged 1.5% overnight; it was worth a lofty 0.7927 at 0511 GMT
- NZD edged higher; it was worth 0.7354 at 0511 GMT
In opinion
1..2..3
The US housing market is in focus, but keep your eye on two markets that have been surprising - the 10-year Treasury and USDJPY, advises James Picerno.
Feel the yield
Asia's markets - bar Australia - seem to be feeling the weight of falling yields in early trading and the market is getting jittery, says Saxo's Singapore team.
Eyes on ECB
ECB president Mario Draghi is likely to disappoint market expectations of an upbeat economic assessment at Thursday's ECB meeting, writes Neil Staines.
Troubled oil
What's next for troubled crude oil and which factors could lead to a recovery, Saxo Bank's Ole Hansen asks in a video update on the oil market.
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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