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Markets

Global Markets Report - 2 February

ASX set to open higher, after US stocks regained losses from the previous day.


Australia

Australian shares are set to open higher, after US stocks regained losses from the previous day.

ASX futures were up 0.4% or 30 points as of 8:30am on Friday, suggesting a higher open.

US stocks reversed much of Wednesday's post Fed losses with strong gains among the consumer discretionary and staples sectors.

DJIA climbed 369 points to 38519, the S&P 500 gained 1.3% to 4906 and the Nasdaq rallied 1.3% to 15361.

In commodity markets, Brent crude oil fell 2.2% to US$78.79 a barrel while gold was up 0.7% to US$2,054.48.

In local bond markets, the yield on Australian 2 Year government bonds was unchanged at 3.67% while the 10 Year yield was also unchanged at 4.01%. US Treasury notes were down, with the 2 Year yield at 4.21% and the 10 Year yield at 3.87%.

The Australian dollar hit 65.69 US cents up from its previous close of 65.64. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 97.54.

Asia

Chinese shares ended mostly lower on continued concerns over the country's economic outlook. "Manufacturing PMI disappointed in January, suggesting a weak start for the economy. Improved production and demand may reflect some front-loading ahead of the CNY," Citi analysts wrote in a research note. PetroChina was down 2.5% and China Coal Energy lost 2.9%. Foxconn Industrial Internet led gainers, with a 10% rise. The Shanghai Composite Index declined 0.6% to 2770.74, the Shenzhen Composite Index was 0.5% lower and the tech-heavy ChiNext Price Index was up 1.0%.

Hong Kong's Hang Seng Index rose 0.5% to close at 15566.21, led by the consumer and gaming sectors. Macau gaming revenue recovered further last month, which suggests positive mass-market trends, Aras Poon, associate director at S&P Global Ratings, says in an email. Among consumer names, Li Ning advanced 6.1% and Haidilao International added 4.6%. Casino operators Galaxy Entertainment and Sands China climbed 5.9% and 4.2%, respectively. Meanwhile, China Unicom (Hong Kong) fell 2.1% and China Merchants Bank declined 1.9%.

Japan's Nikkei Stock Average fell 0.8% to close at 36011.46. The main theme has been risk-off, Commerzbank analysts say in a research report. While Fed Chair Powell acknowledged that rates have likely peaked, he reiterated that the central bank's fight against inflation wasn't finished, the analysts note. M3 Inc. tumbled 13% after its nine-month net profit dropped 6.8% on year, while Nomura Research Institute dropped 6.8% after its 3Q results. Meanwhile, Nomura Holdings rose 5.1% after it announced 3Q results and a share buyback. USD/JPY was at 146.87, down from 147.72 as of Wednesday's Tokyo stock market close. The 10-year JGB yield was down 4 bps at 0.690%.

Indian shares edged lower, tracking Wall Street's losses overnight. The U.S. Fed left markets unassured after standing pat on rates and effectively ruling out a March rate cut, said Vishnu Varathan, managing director at Mizuho Bank. Tech stocks led losses. Wipro lost 1.4% and Tech Mahindra was 1.3% lower. Larsen & Toubro shed 2.4%. Paytm operator One97 Communications fell 20% after the Reserve Bank of India asked Paytm Payments Bank, an associate of One97, to stop onboarding new customers. Maruti Suzuki was the best performer on the benchmark index, gaining 4.1%. The benchmark Sensex closed 0.15% lower at 71645.30.

Europe

European shares fell after the Bank of England left UK interest rates on hold at 5.25%. The Stoxx Europe 600 dropped 0.4%, the CAC 40 retreated 0.9% and the DAX slipped 0.3%, while the FTSE 100 lost earlier gains to edge 0.1% lower. Oil majors traded mixed as Brent crude rose 1% to $81.34 a barrel amid ongoing Mideast tensions. The BOE's three-way vote split reflected a difficult outlook, Rabobank says. While the central bank no longer mentioned potential further interest-rate rises, it said geo-political factors could boost inflation. "We believe cuts are coming, but also think it may take a little longer than the market is currently pricing. We have a first cut pencilled in for September," Rabobank senior macro-economic strategist Stefan Koopman wrote.

The FTSE 100 closed Thursday down 0.11%, after the Bank of England left the interest rate unchanged at 5.25%. The meeting did highlight an important but subtle change to the central bank's thinking, as the debate shifts from raising rates to restricting them, said Deutsche Bank analyst Sanjay Raja. "The wheels are in motion: we continue to think we are one step closer to a May rate cut. Risks are skewed to a slower start, however," the German bank said in a research note.

North America

US stocks reversed much of Wednesday's post Fed losses with strong gains among the consumer discretionary and staples sectors.

DJIA climbed 369 points to 38519, the S&P 500 gained 1.3% to 4906 and the Nasdaq rallied 1.3% to 15361.

Investors are looking ahead to more bellwether earnings after the close and the January payrolls report in the morning.

Slower jobs growth would bolster expectations that the Fed is set to cut interest rates later this year.

The 10-year Treasury yield fell below 3.9% ahead of the data, while the dollar weakened.

Apple, Amazon and Meta are set to report after the close.



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