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Friday, February 3, 2023

Asian Markets Hold up while Wall Street Declines, China Trade Disappoints

The broadest MSCI index of Asia-Pacific stocks outside of Japan increased by 1.82%

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Sadaf Hasan
Sadaf Hasan
Aspiring reporter covering trending topics

CHINA: Early on Monday, China’s trade data showed that imports and exports both declined by 0.7% and fell significantly short of expectations.

As the business has warned that COVID regulations in China are harming iPhone production, Apple suppliers in the area are also under scrutiny.

“zero COVID-19” policy and trade

After Beijing denied it was considering loosening its zero COVID-19 policy, U.S. stock futures and commodities fell in Asia on Monday. However, Asian equities’ resilience lessened the impact of the selling.

Risk assets had risen on Friday amid rumours China was getting ready to loosen its pandemic restrictions, but throughout the weekend, health officials repeated their dedication to the “dynamic clearing” approach to COVID cases as soon as they occur.

The head of market economics at NAB, Tapas Strickland, asserts that despite denials, “notions that China will pivot to living with COVID in the new year are unlikely to be quashed given the very real toll that zero-COVID is having on the economy.”

“With China going into winter, most analysts think a change in COVID is unlikely until at least March,” he added.

On Friday, copper experienced its biggest one-day surge since 2009 thanks to speculation that China would open its economy, while a variety of other resources also benefited from expectations of higher demand.

Additionally, it caused the yuan to soar and sparked a round of profit-taking on long U.S. dollar holdings, especially versus commodities-sensitive currencies like the Australian dollar.

With the Australian dollar down 0.7% at $0.6421 on Monday after rising 3% on Friday, some of that trend partially reversed. In comparison to the offshore yuan, the dollar rose 0.7%.

After falling nearly 2% at the conclusion of last week, the U.S. dollar index recovered by 0.3%. While the euro weakened slightly to $0.9929, the dollar was 0.4% higher against the yen at 147.22 yen.

Nasdaq futures were down 0.3%, while S&P 500 futures fell 0.2%. FTSE futures and the Euro Stoxx 50 declined 0.2% and 0.6%, respectively, on news that the UK government was considering raising taxes and cutting spending.

Chinese blue chips (.CSI300) increased by 0.2%, which was a respectable result given that earlier statistics had revealed that both Chinese exports and imports decreased in October and fell short of expectations.

Apple Inc. (AAPL.O) stated on Sunday that it expects lesser shipments of the iPhone 14 Pro and iPhone Pro Max than initially planned due to COVID-19 production disruptions, highlighting the impact of Beijing’s tight controls.

However, the broadest MSCI index of Asia-Pacific equities outside of Japan (.MIAPJ0000PUS) increased 1.0% as investors seemed to believe the China loosening story might have some truth to it.

Both South Korea’s (.KS11) and Japan’s Nikkei (.N225) indices saw gains.

At least seven Fed members have scheduled talks this week, which will help clarify the rating outlook given that the markets are now just leaning toward a 0.5% rate increase next month, to 4.25–4.5%.

“We maintain the Fed will see sufficient progress on inflation to pause at 4.75% in February, but the risks are skewed toward more hikes that will likely trigger a recession sometime later in 2023 or early 2024,” said Bruce Kasman, head of economic research at JPMorgan.

As per the median predictions, core inflation will fall a tenth to 6.5% and annual CPI inflation will moderate to 8.0%.

After rising by more than 3% on Friday, gold prices in the commodity markets dropped down to $1,671 an ounce.

As U.S. crude fell $1.26 to $91.35 per barrel, oil futures gave up some of their recent gains, with Brent down $1.07 at $97.50.

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Also Read: Apple Warns That Problems in China’s COVID System Will Affect iPhone Shipments

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  • Sadaf Hasan

    Aspiring reporter covering trending topics

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