Friday Morning Coffee - Markets Update - 24 Mar 2023 - Central banks actions contribute to a neutral to positive movements
Markets Update: Central banks actions contribute to a neutral to positive movements
Fri, 24 Mar 2023 08:52 CET
Today's important market events:
- EUR German Manufacturing PMI (Mar) - 09:30 CET
- GBP UK Manufacturing PMI - 10:30 CET
- EU Leaders Summit - 11:00 CET
- USD Core Durable Goods Orders (MoM - Feb) - 13:30 CET
- CAD Core Retail Sales (MoM - Jan) - 13:30 CET
APAC stocks have been subdued after central bank rate hikes. US Treasury Secretary Yellen has stated that the US is prepared for additional deposit actions if necessary. European equity futures suggest a lower open, with the Euro Stoxx 50 down 0.8%. The DXY (US dollar index) is hovering around 102.50, with the Japanese yen leading G10 FX and the New Zealand dollar lagging.
The ASX 200 and Nikkei 225 both struggled as weak PMI data and inflation figures undermined risk appetite. Meanwhile, the Hang Seng and Shanghai Composite indices retreated due to liquidity draining by the central bank and as investors analyzed earnings reports, while the US's addition of 14 Chinese entities to the red flag list further dampened sentiment. In the currency markets, the DXY remained rangebound after recent volatility, while the EUR/USD and GBP/USD struggled for direction in the aftermath of the post-BoE mood and flimsy risk tone. The USD/JPY continued to decline as markets anticipated a more dovish Fed, while the Antipodeans remained contained amid the cautious mood and weak PMI data.
In the fixed income market, 10-year UST (United States Treasury) futures maintained their gains from the previous day's bull steepening. Similarly, Bund (German government bond) futures remained at their best levels from the prior day and were unaffected by recent hawkish comments from the ECB (European Central Bank). On the other hand, 10-year JGB (Japanese government bond) futures were contained following inconclusive inflation data and no additional purchases from the BoJ (Bank of Japan).
In the commodities market, crude futures were relatively stable, but not as low as their previous lows, and were influenced by the overall market risk sentiment. Spot gold traded sideways but held onto most of its gains after the FOMC (Federal Open Market Committee) meeting and is nearing the significant USD 2,000/oz level. Copper futures did not show a clear trend and were restricted by cautious market sentiment.
LME (London Metal Exchange) confirmed that all warehouse operators have confirmed the integrity of the nickel underlying all warrants.
Coming up, there are several economic highlights to watch for, including UK Retail Sales, EZ, UK & US Flash PMIs, US Durable Goods, and speeches from Fed's Bullard, ECB's Nagel, and BoE's Mann.