Morning Report APAC: September rate hike chance falls to 36%
- US inflation comes in above expectations at annual 1.6%
- Probability of a September rate hike falls from above 40% on Friday to 36%
- USD trades slightly weak on the Asian open as rate hike chance declines
By Saxo APAC Sales Trading
1500 – KRW – Bank of Korea Policy Meeting Minutes
1830 – USD – Feb’s Fischer Speaks on Bloomberg Television
US: The US Federal Reserve favourite inflation measure, Core PCE, came in above expectations at 1.6% y/y, up 0.1% m/m, creeping ever so slightly higher but certainly not enough to prompt any rapidly rising inflation fears.
US Personal Spending came in line with expectations at 0.3%, but the prior month was revised slightly up. The data demonstrates the economic data is well supported by the consumer.
Fed rate hike expectations for September fell from above 40% on Friday to 36% yesterday. This mirrors a decline in treasury yields and a slightly higher equity market.
Hong Kong: HK’s retail sales data was released yesterday at 4:30pm SG/HT time. The data was once again a significant downside surprise, printing -8.5% y/y versus -7.4% expected. Hong Kong’s retail sales have been in negative territory since October 2015 and should continue to weigh on the consumer discretionary segment of the market.
After three consecutive days of losses, the Dow Jones Industrial Average closed higher at 18502.99, up 107.58 (0.58%), with financials leading the gain following the hawkish comments from the Fed last Friday and good consumer spending reports. S&P 500 had similar gains and is up 11.34 (0.52%) as well, while the Nasdaq gains were pared at 13.41 (0.26%) higher.
The London market was closed yesterday but the majority of Europe indices closed weaker, with the CAC 40 and DAX down around 0.4%.
Herbalife rose 2.80 (4.63%) after news that billionaire investor Carl Icahn bought more shares in the supplements and weight-loss products company. The stock was punished last Friday as it gapped down but closed higher after reports that Icahn, its major shareholder, was looking to sell some of his shares after Bill Ackman from Pershing Square disclosed that he was approached to buy the shares.
Asia Pacific stocks
Greater China highlights
- China Railway Construction (1186 HK): Wins $1.85bn light rail project in Nigeria
Industrial Bank (601166 CH): First half net 29.4bn yuan vs 27.7bn yuan a year ago
Spring Airlines (601021 CH): First half net 740m yuan vs 620m yuan a year ago
Asahi Group (2502 JP): Recalls baby food after plastic found in some products
Hitachi (6501 JP): Plans to cut costs by 200bn yen this fiscal year, Nikkei says ** JX (5020 JP): President to head combined co. after TonenGeneral merger: Nikkei
Southeast Asia highlights
Lippo Karawaci (LPKR IJ): CVC buys stake in Siloam Hospitals from Lippo Karawaci and Ciptadana
AirAsia (AIRA MK): Second-quarter net income 342.1m rgt vs 243m y/y
Singapore Exchange (SGX SP): Wins approval from its listing advisory committee to allow dual-class shares; names Kwa Chong Seng new board chairman
US Personal Spending came in line with expectations at 0.3%, but the prior month was revised slightly up. Photo: iStock
– Edited by Susan McDonald
This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform. Follow us on @SaxoStrats on Twitter
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