Morning Report APAC: China gyrations end, commodities plateau
- Worries remain over US confidence, which came in below expectations
- Attention shifts from China and commodities to speculation over the Fed's timing
- Copper bounces back from a six-year low with silver and platinum recovering
By Saxo APAC Sales Trading
Economic Data of the Day (Singapore Time)
- 0730 JPY – Retail Trade YoY (Exp. 0.7%, Prev. 3.0%), Retail Sales MoM (Exp. -1.0%, Prev. 1.7%)
- 2000: USD – Pending Home Sales MoM (Exp. 1.1%, Prev. 0.9%)
- 0200: USD – FOMC rate decision (Exp. 0.25%, Prev. 0.25%)
0430: NZD – RBNZ governor Graeme Wheeler speaking
- The index from the New York-based Conference Board revealed that US consumer confidence fell much lower than expected at 90.9 (expectations were 100.0), which was the biggest drop in four years. Lynn Franco, director of economic indicators at the Conference Board said “Consumers continue to assess current conditions favourably, but their short-term expectations deteriorated this month”. "A less optimistic outlook for the labour market, and perhaps the uncertainty and volatility in financial markets prompted by the situation in Greece and China, appears to have shaken consumers’ confidence," she said.
- S&P changes Brazil’s rating outlook to negative (BBB-). Brazil’s planning minister Nelson Barbosa expects rating downgrade will not come
- Malaysian Prime Minister Najib Razak announces cabinet reshuffle
- UK GDP QoQ came in as expected at 0.7% and 2.6% YoY
- European Central Bank approves Greek proposals for the stock exchange to reopen. The timing will be decided by the Finance Ministry
An end to the commodities fall and greater stability in the Chinese equity market pushed commodities currencies higher with NZD up almost 0.9% and USDCAD below 1.3000 again after failing to clearly break the psychological level of 1.3000 for the past few sessions.
In emerging markets, USDBRL had a spike to 3.4329 after the negative outlook from S&P, before selling off at the close of the session with the rally in the US equity market.
Foreign exchange movements
The rates market followed the overall good mood in the equity market and rates rallied 2 to 3 basis points.
European stocks bounced back from five days of losses, buoyed by a combination of solid corporate earnings and deal activity. The UK's RSA Insurance Group surged 18% after Zurich Insurance Group said it’s evaluating a potential offer for the company.
US stocks enjoyed a relief rally breaking a five-day losing streak as attention shifted from troubles in China and the commodities sector to solid corporate earnings and to speculation that the first Federal Reserve interest rate hike may not come until December. The energy sector was up 3%, with Exxon Mobil rising 4.1%, Chesapeake lifting 7.5% and Southwestern Energy up 6.8%.
Twitter reported Q2 results with an EPS of $0.07 (Market estimate: $0.04) on revenue of $502.4m (Market estimate $481.9m). Total active service users increased by only 2 million to 304m and the stock has been weak in after-market trading on doubts over user growth.