Asian Equities Rise Slightly, Dollar Eases as Traders Await Economic Data
Asian Equities and Dollar
Asian equities rose slightly on Tuesday, standing just off their lowest levels since November 2022. Meanwhile, the dollar eased as traders avoided making bets ahead of economic data that could offer clues about the next steps by the U.S. Federal Reserve.
Oil Prices and Israel-Hamas Conflict
Oil prices recovered from previous losses as concerns grew about the Israel-Hamas war escalating into a wider conflict in the oil-exporting region.
Asia-Pacific Shares and European Stocks
MSCI’s broadest index of Asia-Pacific shares outside Japan reversed losses and traded 0.41% higher at 476.72. However, the index is set for a third consecutive month in the red. European stocks, on the other hand, are poised to open lower, with Eurostoxx 50 futures down 0.10% and German futures down 0.11%.
Inflation and Global Economy
Chief Investment Officer Gary Dugan of Dalma Capital expressed concerns about the looming specter of inflation, especially with the recent sharp ascent in oil prices. He believes that if oil prices remain at current levels throughout 2023 and into 2024, it could potentially inject another bout of inflation into the global economy.
High-Profile Earnings and Economic Data
Investor attention will be split this week between the earnings of high-profile companies such as Microsoft, Facebook parent Meta Platforms, and Amazon, as well as a slew of economic data ahead of the Fed’s meeting from Oct. 31 to Nov. 1. Key data includes the announcement of third-quarter gross domestic product by the U.S. Commerce Department and the Personal Consumption Expenditures (PCE) report, the U.S. central bank’s preferred inflation gauge.
Flash Purchasing Managers’ Index (PMI) Data
Investors will also be analyzing the flash purchasing managers’ index (PMI) data from Britain, France, the Eurozone, and the United States, due later on Tuesday. This data barrage precedes central bank meetings in the next two weeks, with the European Central Bank expected to keep rates steady.
China Shares and Investor Confidence
China shares remained under pressure, with Hong Kong’s shares sliding 0.68%. However, the Shanghai Composite Index rose 0.32%. China’s blue-chip CSI300 Index was flat after closing on Monday at its lowest level in 4-1/2 years. Investor confidence remained weak despite efforts by state fund Central Huijin to bolster the flagging market.
U.S. Treasury Yields and Bill Ackman’s Bets
The yield on the benchmark 10-year U.S. Treasury note was up 0.80 basis point at 4.846% in Asian hours on Tuesday. This followed a previous day’s decline after a brief rise above 5.0%. Billionaire investor Bill Ackman covered his previous bets against Treasuries, expecting that the Israel-Hamas war would lead to more investor dollars flowing towards U.S. Treasuries.
Currency Market and Bitcoin
The dollar weakened against a basket of currencies after a 0.5% drop on Monday. The yen remained under pressure but found some relief from the dollar’s retreat. In the cryptocurrency market, bitcoin saw a surge in enthusiasm, driven by speculation about the possibility of an exchange-traded fund.
In commodities, U.S. West Texas Intermediate crude futures rose to $85.76 per barrel, while Brent crude was up to $90.13. Gold added 0.2% to $1,975.49 an ounce.