Stay informed with our Global Markets Digest as we delve into China’s property market challenges, central banks’ upcoming decisions, and pivotal data releases shaping the financial landscape.
In today’s European and global markets update by Kevin Buckland, we observe a relatively light calendar in Europe, implying that market trends are likely to be influenced by developments in Asia. China, in particular, stands out with significant market-moving events.
- China’s property market faces a significant downturn, with new home sales plummeting by 50% in major cities, putting immense pressure on property shares.
- The tech sector in Asia experiences underperformance due to the surprising departure of Alibaba’s CEO from the cloud business, resulting in Hong Kong’s Hang Seng index leading regional declines.
- European and global markets focus on upcoming monetary policy decisions, with the ECB possibly considering a rate hike, and the Bank of England and the U.S. Federal Reserve also on the horizon.
- Investors closely monitor key economic data releases, including the U.S. Consumer Price Index (CPI) data, as central banks grapple with the challenge of managing inflation while supporting economic recovery.
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Global Markets Digest: China’s Property Sector Downturn
Property shares are facing significant headwinds after weekend data revealed a startling 50% drop in new home sales in China’s major cities during the first week of this month. China’s largest private developer, Country Garden, further exacerbated concerns within this sector as it confronts a third round of creditor voting this month to prevent a default by extending.
Tech Sector Underperformance
The tech sector in Asia underperformed, largely due to the unexpected news that Alibaba’s outgoing CEO is also stepping away from the cloud business. Consequently, Hong Kong’s Hang Seng index recorded a decline of approximately 1.5%, leading the downturn in the region.
Mixed Sentiment in Mainland China
On the other hand, mainland blue-chip stocks showed resilience, possibly boosted by a release of data on Saturday that indicated a reduction in deflationary pressures.
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Yuan Strengthens Against Expectations
China’s central bank took action to strengthen the yuan by setting the strongest official midpoint fixing on record, surprising market expectations.
Bank of Japan Hints at Policy Shift
The yen rebounded from a 10-month low after Bank of Japan Governor Kazuo Ueda hinted in an interview that the negative interest rate policy could potentially be phased out by year-end.
Focus on Monetary Policy
While Europe experiences a slow start, the upcoming week is expected to be eventful, primarily revolving around monetary policy decisions. The European Central Bank (ECB) is set to announce its rate decisions on Thursday, with increasing speculation of a rate hike, partly fueled by recent hawkish comments from officials and rising crude oil prices. In contrast, the Bank of England (BOE) will make its announcement on September 21, a day after the U.S. Federal Reserve.
Key Events to Watch:
- BOE chief economist Huw Pill is scheduled to speak today, providing insights into British jobs data on Tuesday and GDP figures to follow.
- The U.S. Federal Reserve has conveyed a reluctance to raise rates this month but has not declared victory over inflation. As such, the U.S. Consumer Price Index (CPI) data scheduled for release on Wednesday will be a pivotal data point to monitor this week.
Notable Data Today:
- Sweden house price index for September.
- Italy industrial production data for July.
- U.S. 3-year note auction.
As markets navigate these developments, investors will be closely monitoring the outcomes and their potential impact on global financial markets.
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