- Market sentiment remains sluggish after a volatile day.
- Stock futures, Asia-Pacific equities trade mixed, yields regain upside momentum.
- Headlines surrounding China, hawkish central bank keep bears hopeful amid doubts over BOE’s action.
- German inflation data, US GDP could entertain traders but risk-aversion is likely to prevail.
Global markets fade the previous day’s optimism as traders await fresh clues to believe in the policymakers’ cautious optimism during early Thursday.
While portraying the mood, the US 10-year Treasury bond yields pare the biggest daily loss in six months and allow the US Dollar Index (DXY) to jump back towards the 20-year high marked the previous day. It’s worth noting that the S&P 500 Futures print mild gains while struggling to keep the bounce off a 21-month low of late.
Recently, China’s Vice Foreign Minister Ma Zhouxu said, per Reuters, “We Chinese will not capitulate. We will not sit and do nothing while our country's interests are being harmed,” suggesting further Sino-American tussles.
Also from the Chinese were headlines that the People’s Bank of China’s (PBOC) first increase in the onshore yuan fix in nine days and plans to issue 2.5 trillion yuan in government bonds in Q4.
Elsewhere, the markets’ doubts about the Bank of England’s (BOE) capacity to restore the British economic performance while keeping the recently criticized fiscal plan weigh on the sentiment. Additionally, the hawkish commentary from the global central bankers, including those from Europe and the US, joins the looming energy crisis in Europe and Russia’s hesitance to respect the Western pressure to exert additional downside pressure on the major currency pair.
That said, traders are currently waiting for Germany’s headline inflation data, namely the Harmonized Index of Consumer Prices (HICP), to determine immediate market moves amid upbeat expectations from the release, 10.0% YoY versus 8.8% prior. Following that, readings of the US Q2 Gross Domestic Product (GDP), expected to confirm -0.6% annualized figure, will be important to watch clear directions.
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