Tuesday 20th August: Asian markets bounce a China announces new benchmark lending rate

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Global Markets:

  • Asian Stock Markets : Nikkei up 0.50%, Shanghai Composite down 0.18%, Hang Seng up 0.13%, ASX up 1.11%
  • Commodities: Gold at $1508.05 (-0.23%), Silver at $16.93 (-0.04%), Brent Oil at $60.02 (+0.47%), WTI Oil at $56.45 (+0.55%)
  • Rates : US 10-year yield at 1.594, UK 10-year yield at 0.484, Germany 10-year yield at -0.650

News & Data:

  • (JPY) Trade Balance -0.13T vs -0.15T expected
  • (GBP) Rightmove HPI m/m -1.00% vs -0.20% previous
  • (NZD) PPI Output q/q 0.50% vs -0.40% expected
  • (NZD) PPI Input q/q 0.30% vs -0.60% expected
  • (EUR) German PPI m/m 0.10% vs 0.00% expected
  • (CHF) Trade Balance 3.63B vs 3.87B expected
  • (EUR) Final Core CPI y/y 0.90% vs 0.90% expected
  • (EUR) Final CPI y/y 1.00% vs 1.10% expected
  • (EUR) Current Account 18.4B vs 32.2B expected
  • China lowers interest rate as part of market-oriented reform amid slowing economy
  • Hedge Funds Throw Heft Behind 2019’s Best-Performing Currency

Markets Update:

Asian shares extended their gains on Tuesday as hopes for stimulus in major economies tempered anxiety about a global recession, boosting riskier assets and drawing money from safe-havens such as bonds and gold.

Asian markets were mixed in quiet trading early Tuesday, after China’s central bank announced its new benchmark lending rate. Markets also expect the Fed to cut rates again at its Sept. 17-18 policy meeting from the current 2.00%-2.25%. The improved mood was helped by a rally on Wall Street overnight, with the S&P 500 gaining 1.21%.

Shares in China and Hong Kong opened lower and swung in and out of negative territory after China lowered its lending reference rate only slightly in the first publication of a new benchmark since new interest rate reforms were announced on Saturday. Chinese shares initially fell at the open but recovered to trade down 0.18%. Stocks in Hong Kong also rose 0.13%, erasing an earlier loss. Nikkei edges up 0.5% and stocks in Australia inch up by over 1%.

U.S. benchmark 10-year Treasuries yields eased slightly to 1.594%, and 2-year yields traded at 1.5248%. A bounce in yields from lows hit last week has eased some of the concerns about the global economy. he dollar hovered near a three-week high on Tuesday, as expectations policymakers around the world would unleash fresh stimulus drove an improvement in appetite for riskier assets and lifted U.S. government bond yields. Oil prices remained steady on Tuesday in Asia amid easing trade tension between China and the U.S. U.S. Crude Oil WTI Futures was little changed at $56.45, while international Brent Oil Futures inched up 0.47% to $60.02.

Oil prices that were earlier down in a tentative sign that worries about an attack at a Saudi oil field over the weekend have eased and supported by some positive developments on the Sino-U.S. trade front. Gold prices were down on Tuesday in Asia as traders awaited the upcoming Jackson Hole Symposium in Wyoming and a speech by Federal Reserve Chairman Jerome Powell. Gold, which is traditionally bought as a safe-haven during times of uncertainty, held steady at $1,508.05 per ounce after tumbling 1.2% on Monday, its biggest daily decline in about a month.

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