Pictured here on June 24, 2022, are workers making umbrellas in a factory in Jinjiang city, Fujian province, China.
Yuan He | Future Publishing | Getty Images
Markets in Asia-Pacific fell on Wednesday as investors anticipate the Federal Reserve to give its summary on current economic conditions, also known as the Beige Book.
China’s exports grew 7.1% in August from a year earlier, missing estimates of 12.8% forecasted in a Reuters poll, after growing 18% in July. The offshore Chinese yuan weakened further to 6.99.
The Nikkei 225 in Japan closed lower at 27,430.3 and the Topix at 1,915.65. In mainland China, the Shanghai Composite pared earlier losses to trade slightly higher and the Shenzhen Component was up 0.41%. In South Korea, the Kospi closed lower at 2,376.46 and the S&P/ASX 200 in Australia was 1.42% lower at 6,729.3
U.S. bond yields surged overnight, with the 10-year U.S. Treasury yield jumping to its highest level since June. The rate on the 30-year Treasury closed at its highest level since 2014. Bond yields move inversely to prices.
The Japanese yen stood at 143.5 against the greenback, while the Korean won was 1,386.38.
Pakistan is paying the price of climate crisis caused by other countries: Minister
Pakistan is facing the worst consequences of the climate crisis thanks in part to the actions of the developed world, Finance Minister Miftah Ismail said, as the country battles the worst floods in its history.
Ismail joins a chorus of proponents from the flood-swept country in saying that despite its small carbon footprint it has suffered the brunt of climate change.
“Pakistan is one of the worst-affected countries by climate change. We have, as you know, a very, very small carbon footprint, we don’t really produce carbon dioxide and other harmful gases,” Ismail told CNBC’s “Street Signs Asia” on Monday.
— Su-Lin Tan
Yen could breach 150, 160 in ‘next couple of months’ says Jesper Koll
The Japanese yen could weaken even further, director of Monex Group Jesper Koll told CNBC’s “Street Signs Asia.”
“I think the parabolic overshoot is still on track, so I expect we’re going to see 150, 160 at some point over the next couple of months,” Koll said, pointing to the country’s trade and current account in deficit as “powerful drivers that will drive the yen weaker.”
Japan’s trade deficit deepened in July, fueled by a record amount in imports outweighing exports, official data showed last month.
–Jihye Lee, Charmaine Jacob
‘Moderate’ U.S.-led regulations likely to boost China’s trade surplus, says Goldman Sachs
A “moderate amount of controls” from the U.S. government on exports to China are likely to incentivize China rather than hurt the market, Goldman Sachs’ chief China economist Hui Shan told CNBC’s “Squawk Box Asia.”
Pointing toward weaker import data as the driver of the nation’s consistent trade surplus, she said the latest regulations from the U.S. ordering Nvidia to restrict chip sales to China could work instead as an incentive.
“In some sense, it is going to incentivize China to produce more domestically, so the production aspect of it, especially the trade surplus aspect of it, could get a boost,” she said.
She added that Chinese officials are “downplaying” its GDP growth target of 5.5% and no longer trying to defend the Chinese yuan from reaching 7.
“Seven is just a number,” she said, “If you just look at the surface, it doesn’t look that flattering, but I think the policymakers are delivering a message where they’re trying to be pragmatic.”
Barkin says he has bias ‘towards moving more quickly’: FT
Richmond Fed President Thomas Barkin said in an interview with the Financial Times he has a bias toward “moving more quickly” rather than slowly.
“I have a bias in general towards moving more quickly, rather than more slowly, as long as you don’t inadvertently break something along the way,” he told the newspaper, adding policymakers are likely to continue hiking rates until they are “convinced” that inflation is under control.
“The destination is real rates in positive territory and my intent would be to maintain them there until such time as we really are convinced that we put inflation to bed,” he said to the FT.
The probability of a 75-basis-point hike at September’s FOMC meeting rose to 74.0% as of early Wednesday morning U.S. time, according to the CME Group’s FedWatch tool. The chance for a 50-basis-point hike now stands at 26%, FedWatch showed.
Japanese yen weakens further, inching closer to 145
The Japanese yen weakened further to 144.35, the weakest since mid-1998 – as the U.S. dollar index strengthened, hitting a fresh 24-year peak against the Japanese currency.
The offshore Chinese yuan also weakened to 6.99, inching closer to the 7 mark, following weaker-than-expected trade data.
South Korea’s won also weakened, surpassing the 1,380-level for the first time in more than 13 years.
Nomura cuts its China GDP forecast — again
Nomura has cut its forecast for China’s full-year GDP to 2.7%, another downgrade from its previous 2.8% estimate set in August.
The new outlook is based on Nomura’s analysis that found 12% of China’s GDP is 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 last few weeks after reporting new local infections. Chengdu has also ordered people to stay home while authorities conduct mass virus testing.
Read the full story here.
China’s exports for August misses forecasts; posts trade surplus over weak imports
China’s exports rose 7.1% in August compared with the same period a year ago, official data showed, missing estimates of 12.8% after rising 18% in July.
Imports ticked up 0.3%, less than the 1.1% gain forecast in a Reuters poll and 2.3% increase in July.
The country saw a trade surplus of $79.39 billion in August driven by weaker import numbers, after it saw a record $101.26 billion in trade surplus in July.
Oil prices fall on expectations of further rate hikes and lower demand growth
Oil prices fell on Wednesday following more Covid curbs in China and expectations of more interest rate hikes globally.
The U.S. West Texas Intermediate futures fell 1.45% to stand at $85.62 per barrel, while Brent crude futures slid 1.14% to $91.77 per barrel, erasing earlier gains following the latest OPEC+ meeting and its decision to pare output.
A Reuters forecast expects WTI to extend its downtrend to reach $83.17 per barrel.
—Lee Ying Shan
CNBC Pro: Russia-Europe tensions could spur a ‘bullish shock’ to oil markets
Oil and gas stocks are set to get a boost from heightened tensions surrounding Russian gas supplies to Europe, according to one analyst.
Kenny Polcari, chief market strategist at SlateStone Wealth, told CNBC’s “Street Signs Asia” that investors should zoom in on big U.S. energy names which are also good dividend payers.
One stock he named is up 125% this year, and he says there’s more “room to run.”
— Weizhen Tan
Australia’s economy grows 0.9% in second quarter
Australia’s real GDP grew 0.9% in the second quarter after rising 0.7% in the previous period, official data showed.
The Australian Bureau of Statistics said the continued growth was backed by the first full quarter of reopened borders.
The data also showed the Australian economy grew 3.6% over the past year. The ABS said strong domestic demand as well as an increase in travel supported overall growth.
— Jihye Lee
CNBC Pro: This chip stock has convincingly beaten its peers this year – and analysts think it can go higher
After years of market beating returns, semiconductor stocks have sold off heavily this year. But one stock has emerged relatively unscathed from the market carnage. Not only has it outperformed its peers, it has beaten the S&P 500 by a country mile.
And analysts think the stock can still go higher.
Pro subscribers can read more here.
— Zavier Ong
US Treasury yields hit highest levels since mid-June
A bond selloff has boosted U.S. Treasury yields to their highest levels since mid-June as investors weigh what strong economic data means for the Federal Reserve’s future rate hikes.
The U.S. 10-year Treasury yield rose as much as 3.353%, the highest level since June 16, when the yield hit 3.495%. Yields are inverse to prices.
The yield on the U.S. 30-year Treasury hit a high of 3.484% and the U.S. 5-year Treasury yield hit 3.334%, also both the top levels seen since mid-June.
The 2-year yield also rose to a daily high of 3.535%, but it is only the highest yield for the note since Friday.
– Carmen Reinicke