Asian Equities Slip to Lowest in 11 Months
Asian equities fell to their lowest level in over 11 months as investors remained cautious ahead of key economic data releases that will provide insights into the future actions of the US Federal Reserve. Oil prices also experienced volatility due to concerns about the potential escalation of the Israel-Hamas conflict, which could impact oil-exporting regions.
Asia-Pacific Shares Decline
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped by 0.28% to reach 473.37, hitting its lowest point since November 2022. The index has declined by 3% this month and is on track for its third consecutive month in the red. Japan’s Nikkei also experienced a decline of nearly 1%. China shares faced pressure, with the Shanghai Composite Index rising by 0.32% and Hong Kong’s Hang Seng Index falling by 0.5%. Additionally, China’s blue-chip CSI300 Index increased by 0.2% after reaching its lowest level in four and a half years on Monday.
Inflation Concerns Loom
Gary Dugan, Chief Investment Officer at Dalma Capital, expressed concerns about inflation due to the recent surge in oil prices. He stated that if oil prices remain at current levels throughout the rest of 2023 and into 2024, it could potentially lead to another bout of global inflation.
Earnings Reports and Economic Data Awaited
US stocks closed mixed on Monday as investors shifted their focus to upcoming high-profile earnings reports from companies such as Microsoft, Meta Platforms (parent company of Facebook), and Amazon. Furthermore, market attention will be on various economic data releases ahead of the Federal Reserve meeting scheduled for October 31 – November 1. This week’s data includes the announcement of third-quarter gross domestic product (GDP) by the US Commerce Department and the release of the Personal Consumption Expenditures (PCE) report, which is expected to show a cooling down of annual headline and core inflation.
Market Movements in Currency and Cryptocurrency
The dollar experienced slight weakness against a basket of currencies, with the dollar index declining by 0.038% to 105.56. The Japanese yen remained under pressure but found some relief as the dollar retreated. In the cryptocurrency market, bitcoin saw renewed interest due to speculation about the potential approval of a bitcoin exchange-traded fund (ETF), prompting short-sellers to exit positions. Bitcoin reached an 18-month peak at $34,283 and was trading at $34,176 in Asian hours.
Oil Prices Recover, Gold Sees Gains
Oil prices rebounded from previous losses in early Asian trade, with US West Texas Intermediate crude futures rising by 0.61% to $86.01 per barrel and Brent futures reaching $90.41, up 0.65% for the day. Spot gold also saw a gain of 0.2%, reaching $1,975.59 per ounce.
Hot Take: Economic Data and Market Uncertainty Drive Asian Equities Lower
Asian equities have reached their lowest point in over 11 months due to cautious trading amidst upcoming economic data releases and geopolitical concerns. The decline in Asia-Pacific shares, along with inflation worries related to oil prices, has contributed to market uncertainty. Investors are closely watching earnings reports from major companies and economic indicators ahead of the Federal Reserve meeting. The dollar has shown weakness against other currencies, while bitcoin has experienced a surge in anticipation of a potential bitcoin ETF. Oil prices have recovered, but gold has seen gains amidst the market volatility. The coming days will be crucial for determining the future direction of Asian equities.
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