In Tokyo, Japan, a woman passes by an electronic board displaying the Nikkei index and the exchange rate between the Japanese Yen and the U.S. dollar outside a brokerage in the business district. This photo was taken on January 4, 2023. (REUTERS/Kim Kyung-Hoon/File photo)
On Tuesday, Asian share markets saw a majority of weaker performance, while the U.S. dollar strengthened. Investors were eagerly awaiting inflation readings from China and the United States, hoping for a clearer understanding of the global economy’s overall health. MSCI’s broadest index of Asia-Pacific shares outside Japan experienced a 0.9 percent increase on Tuesday, following mild gains in U.S. stocks during the previous session. However, the index has dropped by 2.8 percent so far this month. The yield on benchmark 10-year Treasury notes rose to 4.0885 percent, compared to its U.S. close of 4.078 percent on Monday. Additionally, the two-year yield, which rises with expectations of higher Federal Reserve fund rates, reached 4.7682 percent, compared to a U.S. close of 4.758 percent. Australian shares rose by 0.39 percent, while Japan’s Nikkei stock index increased by 0.72 percent. On the other hand, Hong Kong’s Hang Seng Index experienced a decline of 1.73 percent, and China’s blue chip CSI300 Index lost 0.54 percent in early trade. The mixed performance in Asia follows the previous night’s stronger performance in U.S. markets, where the Dow Jones Industrial Average increased by 1.16 percent, the S&P 500 gained 0.90 percent, and the Nasdaq Composite added 0.61 percent.
Global investors are eagerly anticipating inflation readings from China and the U.S., expecting them to reveal significant differences in price movements between these two major economies. According to a Reuters poll of economists, U.S. inflation is likely to have slightly accelerated in July, reaching an annual rate of 3.3 percent, while the core rate remains unchanged at 4.8 percent. ANZ predicts that China’s July consumer price index will show a year-on-year decrease of 0.4 percent. ANZ economists wrote on Tuesday, “The Fed is cautious about potential upside risks to elevated inflation due to excessive labor demand, and most policymakers believe that the policy rate will need to remain restrictive. Weak inflation in China is expected to have a global disinflationary effect on goods markets going forward.”
Later on Tuesday, Chinese trade data for July is expected to show a 12.5 percent decrease in exports compared to the previous year, according to the median forecast of 28 economists in a Reuters poll. Investors are still considering the possibility of economic stimulus from China’s central government to revitalize a stagnant economy. While minor measures have been implemented to support property markets in recent weeks, no broader stimulus has been announced. Mizuho economists said, “While waiting for signs of deflation, markets are torn between economic gloom and hopes of a resounding stimulus that can reignite China’s growth. However, we remain unconvinced that Beijing’s stimulus efforts will successfully lift the struggling economy.”
The dollar remained unchanged against the yen, with the exchange rate at 142.47. This is still a significant distance from its peak this year of 145.07, which was reached on June 30. The euro experienced a 0.1 percent decrease, trading at $1.1002, while the dollar index, which tracks the greenback against a basket of major trading partner currencies, rose to 102.07. U.S. crude oil experienced a 0.51 percent increase, reaching $82.36 per barrel, and Brent crude rose to $85.73 per barrel. Gold saw a slight decrease, with the spot price at $1,935.55 per ounce.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
