8/8 – Risk appetite improving

The US stock market rose as the US and China ceased new tariffs, for now. Global bond yields are higher with gold prices holding at eighteen months lows, suggesting an improvement in risk appetite. The US dollar broadly weakened against its peers as US consumer credit grew slower than expected. A weaker US dollar and positive momentum from the US close may spill into the Asia Pacific trading session today.

Yuan strengthens as PBoC imposes new policy

The offshore Chinese Yuan recovered lost ground as the US dollar softened. The Chinese foreign currency reserve increased as the People’s Bank of China (PBoC) imposed a higher reserve ratio on FX forward contracts yesterday. The Chinese Trade Balance due today may show a retreat, with the consensus forecast at 10% growth. A lower number may be a reflection of adverse impact from the trade war, possibly limiting gains in its respective centres.

Chinese Crude oil future reached 5% daily cap

Chinese crude oil futures rallied to an all-time high, reaching their 5% daily gain limit. This could be a sign of concerns about output uncertainty from Saudi Arabia, and YS sanctions on Iran. The weekly US crude oil inventory report due tonight may determine the direction of markets over the next 24 hours. 

Today’s Action

Futures are pointing to a positive start for Asia Pacific share markets. Growth and higher value stocks may gain better support if risk appetites increase. However, the Chinese Trade Balance and the Australian Housing Finance number may moderate today’s action. In Australia, the financial sector may see a larger correction as AMP announced a drop in underlying profit, and the Commonwealth Bank reported lower actual Earnings Per Share.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.