The dollar surged to a 24-year peak against the yen and a 37-year high versus sterling on Wednesday
Zhang Peng | LightRocket | Getty Images
Markets in Asia-Pacific were mixed following Wall Street’s solid rebound rally overnight in the best day since Aug. 10 for all three averages. Investors will also be closely watching Federal Reserve Chair Jerome Powell’s speech Thursday as markets brace for another 75 basis-point hike later this month.
Japan’s Nikkei 225 closed 2.31% higher at 28,065.28 and the Topix was also 2.19% higher at 1,957.62. In Australia, the S&P/ASX 200 ended its session 1.77% higher at 6,848.7 and the Kospi in South Korea rose 0.33% at 2,384.28.
In mainland China, the Shanghai Composite struggled to find direction and was 0.33% lower while the Shenzhen Component traded 0.86% lower. The Hang Seng Index also slipped 0.75% in the final hour of trade while the Hang Seng Tech Index also fell 0.52%.
The Japanese yen stood at 143.73 against the greenback and the Korean won was 1,380.32.
Australia’s central bank sees case for slower rate hikes
Reserve Bank of Australia Governor Philip Lowe said the central bank “recognizes” that “the case for a slower pace of increase in interest rates becomes stronger as the level of the cash rate rises.”
National Australia Bank economist Tapas Stickland said Lowe’s remarks may be “signaling a downshift to 25bp increments at some point.”
“Given lags in the operation of monetary policy and the rapid increase in interest rates over the past four months, this could be soon, and a pause is also likely at some point,” he said of Lowe’s remarks.
Nio says Nvidia chip restrictions won’t hurt them
“We believe this will not have an impact on our business operations,” founder, chairman and CEO of Nio William Li said, according to a StreetAccount transcript of the company’s translation during an earnings call Wednesday.
“Based on our estimations, our computing power is sufficient for our autonomous driving technology development in the aspect of the AI training for now,” Li said.
— Evelyn Cheng
Oil prices climb following Russian threat to halt energy exports
“The easing in global oil prices was brought about by concerns around slower growth in China following the August trade data,” according to a Mizuho note.
—Lee Ying Shan
Freight rates peaked earlier than expected as global trade slows, S&P says
Freight rates for containers and dry bulkers — or vessels carrying raw materials and bulk goods — have fallen over the past three months, S&P said, adding that rates peaked earlier than expected in the second quarter.
S&P’s Freight Rate Forecast models have also predicted the Baltic Dry Index — a barometer for the price of moving major raw materials by sea — is expected to fall about 20% to 30% for the year before recovering slightly in 2024.
This underscores the increasing risks of a global recession as consumer demand retreats amid rising cost of living and inflation.
Read the full story here.
— Su-Lin Tan
Australia posts record drop in trade surplus; iron ore and coal exports falll
Australia posted a record drop in its trade surplus mainly due to falling iron ore and coal exports.
Exports in July fell 10% from the month before while imports rose 5%, resulting in a shrunken trade surplus of $8.7 billion Australian dollars in July from A$17.1 billion the month before.
Capital Economics said the slumped trade surplus was “well below the analyst consensus of A$14.5 billion and even our bottom of the consensus forecast of A$10.5 billion”.
“The recent fall in the iron ore price hasn’t fully fed through to iron ore exports yet. Indeed, with the RBA’s commodity price index in August 20% below its peak in May, it’s clear that the trade surplus has peaked,” Capital Economics senior economist Marcel Thieliant said.
— Su-Lin Tan
Apple’s Asia suppliers rise after iPhone 14 announcements
U.S. dollar has legs to move even higher, Wells Fargo strategist says
The U.S. dollar has room to inch up even higher thanks to rate differentials on the back of a hawkish Federal Reserve, according to Wells Fargo Securities FX strategist Brendan McKenna.
“We think a lot of these international banks will not be able to raise rates as aggressively as the markets are priced in for,” he told CNBC’s “Squawk Box Asia.”
“So it’s kind of a combination of a more hawkish Fed and a less hawkish tightening cycle from these international central banks that support the dollar over the remainder of this year,” he said.
Huawei launches first smartphone to connect to China’s rival to GPS
Huawei took the wraps off the Mate 50 smartphone, its latest attempt to stay relevant in the mobile market even as it has lost a huge amount of ground due to U.S. sanctions.
Huawei claims this is the first smartphone released to the public that can connect to China’s Beidou satellite networking, a rival to the U.S. state-owned Global Positioning System (GPS) that was completed in 2020.
U.S. sanctions on the company over the past three years have cut the company off from key components and software and crushed its smartphone business.
Read the full story here.
Goldman Sachs raises Fed hike forecasts for this year
Goldman Sachs revised its forecasts for upcoming Federal Reserve rate decisions year.
Analysts led by chief economist Jan Hatzius said in a note that the firm expects a 75-basis-point hike in September, up from a previous forecast of 50 basis points, as well as a 50-basis-point hike in November, also revised from a previous projection of 25 basis points.
It also expects a 25 basis point hike in December — citing officials’ recent hawkish commentary.
The note said Fed officials “have seemed to imply that progress toward taming inflation has not been as uniform or as rapid as they would like,” the note said.
Japan’s economy grew annualized 3.5%, beats estimates
Japan’s economy grew an annualized 3.5% in the second quarter, beating estimates from a Reuters poll forecasting a growth of 2.9%.
The economy grew 0.9% quarter-on-quarter, official data showed.
Spending growth will continue to be positive in Japan, according to Darren Tay, economist at Capital Economics Japan.
“Consumers do have a large pot of pandemic forced savings that they can rely on,” Tay said on CNBC’s “Squawk Box Asia,” adding that investors are betting on further widening of interest rate differentials between the Federal Reserve and a dovish Bank of Japan.
–Jihye Lee, Charmaine Jacob
CNBC Pro: Wall Street pro predicts when the S&P 500 will rally — and reveals how to trade it
Market volatility is here to stay, according to market veteran Phil Blancato.
But the president and CEO of Ladenburg Thalmann Asset Management sees a “strong rally” on the cards as market conditions improve.
He predicts when the rally will be, and names his top picks to trade the volatility.
Pro subscribers can read more here.
— Zavier Ong
All major averages close higher, Nasdaq snaps 7-day losing streak
Stocks rallied Wednesday as Wall Street looked past concerns about aggressive rate hikes coming from the Federal Reserve.
The Dow Jones Industrial Average gained 435.98 points, or 1.40%, to end the day at 31,581.28. The S&P 500 rose 1.83% to 3,979.90 and the Nasdaq Composite ticked up 2.14% to 11,791.90, breaking a seven-day losing streak.
Brainard says Fed is ‘in this for as long as it takes’
Federal Reserve Vice Chair Lael Brainard pledged on Wednesday to continue the central bank’s flight against inflation, saying that rising prices were hurting lower income households.
“We are in this for as long as it takes to get inflation down,” Brainard said in prepared remarks for a speech in New York. “So far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further.”
Brainard said there was some examples of prices coming down in the retail sector but that there “also could be scope for reduction” in the profit margins of auto companies in particular.
— Jesse Pound, Jeff Cox