Asian Stock Market: Grinds lower on sluggish US bonds, China worries

Asian shares hold lower ground amid jittery markets before the key testimony by Fed Chair Powell, US Treasury Secretary Yellen.
Western alliance joins hands to combat China’s alleged human rights violation, Beijing fights back.
Germany unveils fears of virus resurgence, Powell–Yellen sound cautiously optimistic.
New Zealand announces measures to control housing market, Australia bears the burden of floods.

Anil Panchal FXStreet

Asian equities remain depressed as regional leader China battles the Western pressure. Also challenging the sentiment is the cautious mood ahead of a prime-time appearance by US Fed Chair Jerome Powell and Treasury Secretary Janet Yellen in front of Congress.

America, Europe, Canada and the UK join hands to voice against China’s human rights violation in Xinjiang. The European Union (EU) goes a step farther and sanctions 10 diplomats from Beijing, to which the dragon nation responds with hints of summoning the EU ambassador to protest the punitive measures.

Challenges to the People’s Bank of China’s (PBOC) easy money policy and hopes of a strong economy are extra filters to the risks that weigh on Chinese markets and exert downside pressure on major Asia bourses. While portraying the same, MSCI’s index of Asia-Pacific shares outside Japan drops 0.40% whereas Japan’s Nikkei 225 declines 0.15% during the early Tuesday.

Stocks in New Zealand buck the trend amid the government’s heavy measures to tame the housing market bubble, however, Australia’s ASX 200 struggles for a clear direction amid a flood in New South Wales and easy Treasury yields. Elsewhere, Indonesia’s IDX Composite prints 0.20% intraday losses while Indian’s BSE Sensex prints mild gains on mixed clues.

Read: S&P 500 Futures track US Treasury yields to south ahead of Powell–Yellen duet

Finally, the coronavirus (COVID-19) resurgence and the vaccine jitters are extra catalysts that traders will need to follow in addition to the US congressional testimony. Given the hopes of upbeat statements from top-line US policymakers, any disappointment or hints of reflation can weigh on the market’s mood more than feared.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

GBP/USD languishes near weekly low, below 1.3600 as USD bulls await Warsh's speech

The GBP/USD pair is seen consolidating near the lower end of its weekly range, below the 1.3600 mark, during the Asian session. The downside, however, remains cushioned as traders look for more cues about the US Federal Reserve's interest rate path before placing fresh directional bets.

EUR/USD holds gains above 1.1650 on hawkish ECB bias

The EUR/USD pair edges higher to around 1.1655 during the early Asian session. A hawkish stance of the European Central Bank provides some support to the Euro against the US Dollar. Traders will closely monitor the Jackson Hole Symposium event later on Friday for fresh impetus.

Gold keeps sight of $4,700 ahead of Fed Warsh’s speech

Gold is making another run to retest 15-week highs of $4,697 early Thursday. Gold traders are taking advantage of an upbeat mood-led US Dollar (USD) retreat, looking past hot US core Personal Consumption Expenditures (PCE) Price Index data for July. Renewed USD weakness offers the much-needed boost to Gold, following Wednesday’s pullback from near the $4,675 neighbourhood.

Bitcoin holds at $78,000 amid US PCE surprise – SPX6900, VeChain rally

The broader cryptocurrency market maintains a constructive tone, with Bitcoin (BTC) sustaining gains above $78,000 on Thursday. The US July Personal Consumption Expenditures (PCE) Price Index inflation came in higher than expected on Wednesday, suggesting that inflation remains elevated. SPX6900 (SPX) and VeChain (VET) recorded double-digit gains over the last 24 hours, emerging as top performers.

South Korean Won gains on back-to-back BoK interest rate hikes

The South Korean Won trades higher against the US Dollar on Thursday, with USD/KRW falling 0.3% to near 1,380 during the Asian trading session. The pair revisits its 11-month low as back-to-back interest rate hikes by the Bank of Korea have strengthened the currency.

Kevin Warsh’s Jackson Hole dilemma: Say too much, too little, or just enough

Kevin Warsh is preparing to deliver his first Jackson Hole speech as Federal Reserve (Fed) Chair on Friday, and expectations extend well beyond whether interest rates will be raised or left unchanged in September.