Asian Stock Market: Tracks Wall Street losses on economic fears ahead of ECB

Asian equities hold lower grounds tracking their US counterparts amid risk-off mood.
Virus spread challenges economic recovery, monetary policy tightening concerns also weigh on the sentiment.
China PPI jumps to 13-year high in August, Indonesia Retail Sales dropped during July.
ECB’s PEPP verdict becomes the key event, US President Joe Biden’s six-pronged strategy is important too.

Anil Panchal FXStreet

Global markets, including Asia, turn skeptical ahead of the all-important ECB monetary policy on Thursday. Also exerting downside pressure on the mood are growth concerns and virus updates, not to forget Fed tapering chatters.

Read: Wall Street Close: Bears tighten grips over economic fears, pre-ECB caution

Investors initially took clues from the downbeat US stocks before the fresh covid numbers and economics added weakness into the sentiment. That said, the MSCI’s index of Asia-Pacific shares outside Japan drops 1.15% while Nikkei 225 prints 0.80% intraday loss by the press time of the pre-European session.

It’s worth noting that the challenges to the economic recovery were cited by the Fed policymakers while teasing taper tantrums after the US JOLTS Job Openings refreshed record top. St. Louis Fed Bank President James Bullard and New York Fed Bank President John Williams backed tapering in 2021 whereas Dallas Federal Reserve Bank President Robert Kaplan makes the case for an October taper despite cutting on Q3 GDP due to covid.

The mood soured further after Australia reports the second day of increase in covid cases and China also marked an uptick in the COVID-19 numbers. Further, Japan is ready to extend the covid-led state of emergency after the activity restrictions end of September 12.

Talking about data, China Consumer Price Index (CPI) dropped below 1.0% forecast and prior to 0.8% YoY, MoM figures also declined below 0.5% market consensus to 0.1%. However, the factory-gate inflation measure, the Producer Price Index (PPI), crossed 9.0% expected figures with a 9.5% level to jump to the 13-year high. Elsewhere, Indonesia Retail Sales contracted by 2.9% versus the previous expansion of 2.5%.

China’s summoning of gaming firms on Wednesday precedes the pre-ECB fears to also disappoint the Asian bulls.

Amid these plays, stocks in Australia drop around 2.0% whereas markets in New Zealand and China remain down by nearly 1.0%. Further, South Korea’s KOSPI loses 1.35% whereas Indonesia’s IDX and Indian shares print mild losses by the press time.

Although the ECB’s verdict on the Pandemic Emergency Purchase Program (PEPP) become the key, comments by US President Joe Biden for the six-pronged strategy to battle the pandemic woes also become crucial to follow. Also, virus updates, stimulus chatters and weekly US jobless claims are important too.

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.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.