Markets

Asia markets focus on White House upheaval, dollar, Caixin PMI, RBA

Anthony Scaramucci was fired by President Donald Trump just 10 days after he was tapped to be White House communications director. The dismissal, reportedly to give new Chief of Staff John Kelly a clean slate, came several days after Scaramucci’s profanity-laden call to a New Yorker reporter.

The dollar index, which tracks the U.S. currency against a basket of six rival, tumbled overnight to its lowest levels since May 2016. The dollar index stood at 92.895 at 8:01 a.m. HK/SIN, after trading as high as 93.535 earlier in the overnight session.

The greenback also ceded ground against the yen, falling to its lowest levels in six weeks overnight, Reuters data showed. The dollar last fetched 110.32 yen, lower than levels around the 111 handle seen last week but higher than the low of 110.19 seen overnight.

Among the early market movers were several Japanese corporates that reported first-quarter earnings after the market close on Monday. Shares of Japan Airlines rose 2.38 percent in early trade after the airline on Monday revised upwards its full-year earnings forecast after the airline’s first-quarter earnings rose 12 percent on year Monday.

Panasonic said first-quarter operating profits rose 16.9 percent, in line with expectations, while Mizuho Financial Group announced net profits fell nearly 11 percent due to low interest rates. Panasonic stock was down 0.62 percent and Mizuho declined 0.66 percent.

In other corporate news, authorities in India have raised concerns over Shanghai Fosun Pharmaceutical Group’s proposed acquisition of Gland Pharma, Reuters reported. If the deal goes through, it would be China’s largest takeover in India, the news agency added. The move also comes amid heightened scrutiny in China of foreign investments made by local corporates.

On the earnings front, Japan’s Honda and Sony, and Hong Kong’s SJM Holdings are expected to report results.

Oil prices largely held onto overnight gains. Brent crude edged down 0.11 percent to trade at $52.69 a barrel and U.S. West Texas Intermediate was flat at $50.17 a barrel.

The commodity had hit two-month highs overnight on talk of the possibility of U.S. sanctions against Venezuela’s oil sector after a controversial election on Sunday. The U.S. has only slapped sanctions on Venezuelan President Nicolas Maduro so far, Reuters reported.

In currencies, the euro soared to a two-and-a-half year high against the greenback overnight on solid euro zone inflation data. The common currency stood at $1.1824 at 8:02 a.m. HK/SIN after trading as high as $1.1845 earlier in the session.

“It’s been a combination of continued momentum appetite for the euro, aided by somewhat better-than-expected data out of Europe, mixed data from the U.S., and over recent hours, more revolving doors at the White House,” said National Australia Bank Director of Economics David de Garis in a Tuesday morning note.

Ahead, markets are expected to focus on Caixin manufacturing PMI a day after the official PMI data came in below expectations. The official PMI for July stood at 51.4, lower than the 51.6 forecast by economists in a Reuters poll.

Investors are also expected to keep an eye on the Reserve Bank of Australia’s monetary policy decision later in the day, which could have implications for the Aussie dollar (all times in HK/SIN):

  • 9: 45 a.m.: China Caixin manufacturing PMI
  • 11:50 a.m.: Thailand CPI for the month of July
  • 12:30 p.m.: Reserve Bank of Australia decision due

Stateside, U.S. equities were mixed on optimism over a strong earnings season, even though major tech stocks pulled back.

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