EQUITIES
Shares in Asia-Pacific were mixed Friday as investors watched for market reaction to a slew of China data.
The Shanghai Composite was down 1.17%, while the Hang Seng index in Hong Kong slipped 2.12%. Chinese markets were lower after Beijing’s GDP growth figures came in weaker than anticipated. China’s GDP grew 0.4% in the Q2, compared with 4.8% in the Q1. The Q2 report is China’s weakest GDP print since the Q1 of 2020 when the COVID-19 pandemic first hit.
Elsewhere, the Nikkei 225 in Japan was 0.54% higher, South Korea’s KOSPI rose 0.37%, and Singapore’s Straits Times index advanced 0.09%. In Australia, the S&P/ASX 200 dropped 0.67%.
Meanwhile, the European stocks were on track to open slightly higher on later today after a fresh wave of global interest rate hikes exacerbated fears about the outlook for economic growth.
OIL
Oil prices edged lower on Friday, pressured by the strong dollar, demand-sapping COVID-19 curbs in top crude importer China, and fears of a global economic slowdown.
U.S. crude was 0.08% lower at $96.34 per barrel, while Brent crude was down 0.19% at $99.52 per barrel.
U.S. President Joe Biden will fly to Saudi Arabia on Friday, where he will attend a summit of Gulf allies and call for those allies to pump more oil. Though doubt exists as to how much extra Saudi Arabia can bring into the market quickly, with spare capacity at the OPEC is running low with most of the producers pumping at maximum capacity.
CURRENCIES
The dollar index, which measures the currency versus six counterparts, were firm at 108.645, after reaching and then falling back from the highest since September 2002 at 109.29 on Thursday. The index slipped overnight after two Federal Reserve policymakers said they favoured a smaller rate rise than the 100 basis-points that investors were betting on.
Even with the pullback, the dollar index is on track for a third winning week, up 1.58% from last Friday.
GOLD
Gold sat at $1,705.10 an ounce, just above a one-year low overnight. U.S. gold futures dropped 0.28% to $1,701.10.
ECONOMIC OUTLOOK
Global equity markets were mixed on Friday and were heading for a weekly loss as sentiments remained jittery following global economic outlook uncertainties. A fresh slew of rate hikes around the world deepened concerns about the outlook for global economic growth.
A number of central banks raised interest rates this week to tackle soaring inflation. The Bank of Canada surprised markets with a 100-bps rate hike, central banks in South Korea and New Zealand announced 50-bps hikes, and in Singapore and the Philippines authorities tightened policy out-of-cycle to tamp down on inflation. The U.S. Federal Reserve is also seen stepping up its monetary policy action after an unexpectedly hot inflation print.
Investors also watched for market reaction to a slew of China data. China's economy contracted sharply in the Q2 data, while annual growth also slowed significantly, highlighting the colossal toll on activity from widespread COVID-19 lockdowns, which jolted industrial production and consumer spending.
The world’s second-largest economy eked out Q2 GDP growth of 0.4% from a year ago compared with 4.8% in the Q1. The Q2 report is China’s weakest GDP print since the Q1 of 2020 when the COVID-19 pandemic first hit. Retail sales topped expectations, however, rising 3.1% in June.
In Europe, political uncertainty is at Rome after the country’s president rejected Prime Minister Mario Draghi’s offer to resign. Draghi said he would quit as Italian leader after a political party in his ruling coalition refused to participate in a confidence vote earlier in the day. Italian President Sergio Mattarella rejected Draghi’s resignation and asked him to address Parliament to get a clear picture of the political situation.
