Markets in the Asian domain are displaying mixed signals amid respective developments. The market mood has caught caution as US Treasury yields have extended their gains on early Tuesday. The return on 10-year US Treasury bonds has jumped to near 3.54%. S&P500 futures have extended their losses amid uncertainty due to the extended weekend. While the US Dollar Index (DXY) is struggling to save the 102.00 support.
At the press time, Japan’s Nikkei225 soared 1.23%, ChinaA50 drops 0.64%, Hang Seng tumbled 0.90% and Nifty50 gained 0.64%.
Volatility in the Japanese equities was highly expected as uncertainty for the Bank of Japan (BOJ)’s first monetary policy of CY2023 is soaring. Investors are keenly waiting for a commentary on the expression of exit from decade-long ultra-loose monetary policy. However, headlines from Reuters that the New BOJ governor nominee is likely to be presented to parliament on Feb 10 have infused fresh blood into the Japanese stocks. Career c.bankers Amamiya, Nakaso, and Yamaguchi are seen as top candidates for being the successor of current BoJ Governor Haruhiko Kuroda.
Meanwhile, Chinese indices failed to find strength despite the upbeat Gross Domestic Product (GDP) data. In the fourth quarter of CY2022, the Chinese economy expanded by 2.9% on an annual basis while the street was expecting an expansion of 1.8%, lower than the prior release of 3.9%. On a quarterly basis, the economy has remained steady but managed to avoid contraction as investors were expecting de-growth by 0.8%.
Trade deals between the United States and China are set build fresh record of $694.4B, fading fears of any grudge between the giant economies, Brooklyn said, reported by Bloomberg. Also, the US Treasury Department said late Monday, US Treasury Secretary Janet Yellen will hold her first face-to-face meeting with Chinese Vice Premier Liu He on January 18 in Zurich, per Bloomberg. The pair “will exchange views on macroeconomic developments and other economic issues.”
Apart from that, annual Industrial Production (Dec) has been reported stronger than anticipated at 1.3% vs. the expectations of 0.5% but lower than the former release of 2.2%. The annual Retail Sales have contracted lower than expected by 1.8% against the estimate of -7.8%.
On the oil front, oil prices have recovered dramatically from $79.00 as reopening reforms in China will produce sheer liquidity, which is expected to trigger a rally in commodities ahead. Moreover, investors are awaiting the monthly report from the Organization of Petroleum Exporting Countries (OPEC), which might deliver signs of a further squeeze in oil supply.
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EUR/USD is trading listlessly above 1.0800, unimpressed by the upbeat German and Eurozone ZEW Economic Sentiment data. Solid Treasury yields and broad US Dollar recovery keep the upside capped while hawkish ECB commentary continues to lend support to the Euro.
GBP/USD is trading above 1.2200, rebounding from daily lows after the UK labor market report. The UK Jobless Rate steadied at 3.7% in November while the average hourly earnings rose more than expected. The US Dollar rebound fizzles out, helping the pair.
Gold price edges lower for the second successive day on Tuesday and moves further away from its highest level since April, around the $1,929 region touched the previous day. The XAU/USD remains depressed heaving into the European session.
An independent Terra development community, TerraCVita has raised $2 million to fund new DeFi projects on its ecosystem. Terra, which has suffered contagion after the collapse of crypto broker FTX, could see a recovery in its native token Luna Classic’s price.
It might be a day away, but the BoJ still holds sway as markets fret about the BoJ's highly uncomfortable position, which is likely holding global markets hostage. Global shares are trading mixed after a quiet session for overseas markets because Wall Street was closed for a public holiday.
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