Moving markets today: Asian stocks decline, yen slump sparks market intervention alert, oil price drop; gold prices near two-week low. focus shifts to US economic data and Biden-Trump debate
Major US stock indexes saw modest gains after a volatile day of trading, as investors awaited a presidential debate and an important inflation report that could influence Federal Reserve decisions. Hong Kong’s stock market experienced losses on Thursday, driven by early declines in Chinese tech companies listed there. Oil prices dropped due to concerns over slower US demand following unexpected increases in inventory. Gold prices remained near a two-week low, influenced by a strong dollar and higher yields. Meanwhile, Japanese authorities closely monitored the yen’s rapid decline. In China, industrial profit growth slowed in May amid an uneven economic recovery. The UK’s car production fell by nearly 12 per cent in May as the industry continued its shift towards electric vehicles, as reported by industry sources. Traders are focusing on upcoming US GDP and PCE price index reports to gauge potential interest rate adjustments. The FTSE 100 ended lower on Wednesday, and early futures indicated a weak start for Thursday’s trading session. Here are five key takeaways for your day.
Japanese authorities vigilant as yen rapidly weakens, breaching 160
Masato Kanda, Japan’s top currency official, voiced serious concerns and heightened alertness regarding the yen’s sharp decline. The yen reached 160.63 per dollar during early Asian trading, staying close to its weakest level since 1986, despite a slight rebound from Wednesday’s low of 160.88. Over the month, the yen has weakened by about 2 per cent, and by 12 per cent over the year against the resilient US dollar.
China’s industrial profits grow modestly in May amid uneven recovery
China’s industrial profits showed a notable slowdown in May, according to official data released Thursday. This reflects the difficulties faced by the world’s second-largest economy, as weaker domestic demand has restrained overall economic growth.
Profit growth in May was modest at 0.7 per cent compared to the previous year, down from a 4 per cent increase in April. The cumulative profit increase for the first five months of the year also eased to 3.4 per cent, down from 4.3 per cent in the January to April period, as reported by the National Bureau of Statistics (NBS).
UK car production drops 12 per cent in May
Britain’s car production fell 11.9 per cent year-on-year in May, the third consecutive monthly decline, as manufacturers transitioned to EV production. The Society of Motor Manufacturers and Traders (SMMT) reported 69,652 cars produced, down from 79,046 last year. EVs made up nearly 38 per cent of the output, with 26,475 units produced, Reuters reported.
What’s on the radar
Today, President Joe Biden and Republican contender Donald Trump are set to debate in Atlanta, an event that could significantly influence the tight race for November’s election, as recent polls suggest.
In the UK, there are no major economic updates today, but Friday’s GDP report could support the Bank of England’s case for a potential interest rate cut in August.
The approaching parliamentary elections scheduled for July 4th have fostered a sense of caution among investors, who foresee potential market impacts due to the prevailing political uncertainty.
Investors are also focused on Friday’s US personal consumption expenditures (PCE) price index report, which is anticipated to show a decline in inflation pressures, in line with the Fed’s preferred inflation measure.
Other key reports due include weekly jobless claims, durable goods orders, pending home sales, and revised first-quarter GDP data.
The Bank of England is also set to release its latest Financial Stability report, while in the euro area, the European Central Bank will publish M3 money supply growth figures for May.
Asian markets slide; Japan’s Nikkei drops 1 per cent
Overnight, the Dow Jones rose slightly by 0.04 per cent to 39,127.80, the S&P 500 increased by 0.16 per cent to 5,477.90, and the Nasdaq Composite went up by 0.49 per cent to 17,805.16. Nvidia saw a late surge, closing up 0.25 per cent, while other tech giants like Apple, Amazon, and Tesla also posted gains.
In Europe, the EURO STOXX 50 futures dropped 0.32 per cent, and the FTSE 100 ended the day down 0.3 per cent, with futures indicating a weak start for Thursday, falling 0.23 per cent to 8,250.5 points.
In Asia, Hong Kong’s Hang Seng index and its tech subindex both fell by 1.6 per cent, impacted by declines in Tencent, Trip.com, and Bilibili. The Japanese yen weakened to ¥160.40 per dollar, its lowest since 1986, following a selloff.
Japan’s Nikkei 225 dropped over 1 per cent, Taiwan’s TWII decreased by 0.45 per cent, and Chinese stocks saw losses with the CSI300 and Shanghai Composite down more than 0.7 per cent. South Korea’s Kospi also declined by about 0.4 per cent.
Yields on two-year US Treasuries rose by 0.5 per centage points to 4.74 per cent, while 10-year Treasury yields increased by 0.09 per centage points to 4.32 per cent.
In the commodities market, Brent crude futures fell 0.4 per cent to $84.92 a barrel, showing a 3 per cent decline for the quarter so far. Gold prices dropped as yields rose, trading at $2,297 an ounce.