October 4, 2022

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Asia Pacific markets trade less; China’s trade data in August missed expectations

Asia Pacific markets trade less;  China's trade data in August missed expectations

Goldman Sachs says “moderate” US-led regulations are likely to boost China’s trade surplus

Goldman Sachs’ chief China economist Hui Shan told CNBC’s “Squawk Box Asia” that the “moderate amount of controls” by the US government on exports to China is likely to stimulate China rather than hurt the market.

Pointing to the weaker import data as a driver of the country’s persistent trade surplus, she said the latest regulations from the United States require Nvidia to restrict chip sales to China could instead act as a catalyst.

“In a sense, it will incentivize China to produce more domestically, so the production side of it, especially the trade surplus side of it, could get a boost,” she said.

She added that Chinese officials were “downplaying” the 5.5% GDP growth target and no longer trying to defend the Chinese yuan from reaching 7.

“Seven is just a number, if you just look at the surface, it doesn’t sound very interesting, but I think policy makers are giving a message where they are trying to be pragmatic,” she said.

– Jie Lee

Barkin says it tends to ‘move more quickly’: Financial Times

Richmond Fed President Thomas Barkin said in a statement Interview with the Financial Times Has a tendency to “move more quickly” rather than slowly.

“I generally have a bias toward moving more quickly, rather than slower, as long as you don’t inadvertently break something along the way,” he told the newspaper, adding that policy makers are likely to keep raising prices until they are satisfied that “inflation is under control.” .

“The destination is the real rates are in positive territory and I intend to keep them there until such time as we are convinced we are putting inflation to bed,” he told the Financial Times.

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The probability of a 75 basis point lift at the September Federal Open Market Committee meeting rose to 74.0% as of early Wednesday morning US time, according to the CME’s FedWatch Tool. FedWatch showed that the chance of a 50 basis point lift now stands at 26%.

– Jie Lee

The Japanese yen weakens further, slowly approaching 145

The Japanese yen weakened further to 144.35, the weakest since mid-1998 – as the US dollar index strengthened, Reaching a new peak for 24 years against the Japanese currency.

The offshore Chinese yuan also weakened to 6.99, slightly approaching the 7 mark, after weaker-than-expected trade data.

The South Korean won has also weakened, surpassing the 1,380 level for the first time in more than 13 years.

Nomura cuts China’s GDP forecast – again

Nomura lowered its full-year Chinese GDP forecast to 2.7%, another drop from its previous estimate of 2.8% set in August.

The new forecast is based on Nomura’s analysis that found 12% of Chinese GDP to be affected by Covid controls on a weighted basis, up from 5.3% last week.

Several cities, including the tech hub of Shenzhen, have tightened Covid controls in the past few weeks after new local infections were reported. Chengdu also ordered people to stay at home while authorities conduct mass virus testing.

Read the The full story is here.

“Evelyn Cheng”

China’s August exports missed expectations. Recorded a trade surplus over weak imports

Oil prices fall amid expectations of higher interest rates and lower demand growth

oil prices Drops Wednesday after more Covid restrictions in China and expectations of further interest rate hikes globally.

The West Texas Intermediate While futures contracts fell 1.45% to stand at $85.62 a barrel Brent crude Futures fell 1.14% to $91.77 a barrel, giving up earlier gains after the latest OPEC+ meeting and its decision to cut production.

Reuters forecasts expect WTI to extend its downtrend to $83.17 per barrel.

– Lee Ying Shan

CNBC Pro: Tensions between Russia and Europe could trigger a “bullish shock” for oil markets

Oil and gas stocks are set to get a boost from rising tensions surrounding Russian gas supplies to Europe, according to an analyst.

Kenny Polkari, chief market strategist at SlateStone Wealth, told CNBC’s “Street Signs Asia” that investors should focus on big US energy names that are also good earnings drivers.

One stock he named is up 125% this year, and he says there is “more room to run.”

Professional subscribers can read more here.

– Weezin Tan

Australia’s economy grows 0.9% in the second quarter

CNBC Pro: This chip stock has convincingly outperformed its peers this year — and analysts think it could rise

After years of strong market returns, semiconductor stocks have sold out heavily this year. But one stock came out relatively unscathed from the market carnage. Not only did it outperform its peers, it beat the S&P 500 by a diagonal mile.

Analysts believe that the stock can still rise.

Professional subscribers can Read more here.

– Xavier Ong

US Treasury yields are at their highest since mid-June

The bond sale boosted US Treasury yields to their highest levels since mid-June as investors weigh what strong economic data means for future interest rate hikes for the Federal Reserve.

The 10-year US Treasury yield rose 3.353%, the highest since June 16, when the yield was 3.495%. Yield is opposite to price.

The 30-year US Treasury yield was 3.484% and the 5-year US Treasury yield was 3.334%, both the highest levels seen since mid-June.

The two-year yield also rose to a daily high of 3.535%, but it is the highest note yield since Friday.

– Carmen Renick