Markets in the Asian domain have witnessed decent demand tracing the recovery in S&P500, recorded on Wednesday. The United States equity domain witnessed strength after a consecutive drop in the US Manufacturing PMI. The economic data dropped to 48.4 vs. the consensus of 48.5 and the former release of 49.0. The Institute of Supply Management (ISM) cited this as the lowest reading since May 2000.
At the press time, Japan’s Nikkei225 added 0.26%, ChinaA50 soared 2.07%, Hang Seng jumped 1.18%, and Nifty50 remained flat.
The volume of manufacturing activities in the United States has dropped consecutively for the second month, led by aggressive interest rate policy by the Federal Reserve (Fed) for the entire CY2022. A spree of shrinkage in manufacturing activities has bolstered expectations of a further decline in inflation expectations. This might force Fed chair Jerome Powell to wrap up tight monetary policy quickly and resume providing monetary support to firms for addressing their investment and expansion plans.
Meanwhile, Chinese stocks have witnessed a sheer buying interest despite the Covid situation getting vulnerable each day. The release of upbeat Caixin Service PMI data has brought strength to equities. China’s Caixin Services PMI for December has arrived at 48.0 vs. 47.5 expected and 46.7 prior, showing that the country’s services activity slowed its pace of contraction in the reported month.
Nikkei225 remained marginally positive as the Bank of Japan (BoJ) aims to revise its inflation targets in its new quarterly projections for CY2023 and 2024, as reported by Reuters.
On the oil front, oil prices witnessed a bloodbath on Wednesday as a decline in US manufacturing activities has bolstered the risk of recession. West Texas futures dropped below $73.00 as rising Covid infections in China are signaling a delayed recovery.
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EUR/USD managed to stage a modest rebound after dropping below 1.0600 earlier in the day. As investors refrain from making large bets ahead of the private sector employment data from the US, the pair's trading action remains relatively subdued on Thursday.
GBP/USD came under modest bearish in the early European morning on Thursday and declined toward 1.2000 before recovering modestly. The cautious market mood doesn't allow the pair to gather recovery momentum as focus shifts to US data releases.
Gold price has lost its traction and dropped below $1,850 during the European trading hours on Thursday. With the benchmark 10-year US Treasury bond yield rising nearly 1% on the day, XAU/USD stays under modest bearish pressure ahead of US data releases.
Bitcoin price steadied and broke out of its triangle formation as US Federal Reserve officials agreed to slow the pace of interest rate hikes. Bitcoin price broke past the 50-day Exponential Moving Average at $16,714.
Fed Powell remains unimpressed with the reduction of the rate of inflation; down to 7.1% in November, from 9.1% June. The Summary of Economic Projections shows a desire of the Fed to increase their forecast for the Fed Funds Rate to 5% in 2023.
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