??Asian Stocks Bounce Back Slightly from 10-Month Lows, Concerns Over Interest Rates Persis!
Asian stocks rebounded slightly from their recent 10-month lows but remain on track for their worst quarterly performance in a year due to concerns about rising interest rates, while the U.S. dollar maintains its strength. The MSCI Asia-Pacific index outside of Japan rose by 0.59%, but it's still not far from the 10-month low it hit just the previous day. This quarter, the index is set for a 5% drop, marking its worst performance since a 13.6% decline in the same period last year.
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In Japan, the Nikkei (NI225) edged down by 0.10%, while Australia's S&P/ASX 200 index (XJO) gained 0.21%. Hong Kong's Hang Seng Index (HSI) was up by 0.64%. The Chinese markets were closed for a holiday, with a break scheduled for the next week. All eyes are on the Chinese property sector after China Evergrande Group (3333) announced that its founder is under investigation for suspected "illegal crimes."
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In the United States, economic data revealed that the economy maintained solid growth in the second quarter, with signs of acceleration in the current quarter. However, concerns linger about a potential government shutdown and an ongoing auto workers' strike, which could dim the outlook for the rest of 2023.
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Ryan Brandham, head of global capital markets, North America at Validus Risk Management, noted, "From this perspective, the current GDP figure is not seen as a significant threat and may provide some comfort in an otherwise concerning inflationary environment." Investors are now awaiting the U.S. personal consumption expenditures price index later in the day for the latest insight into inflation. The recent surge in Treasury yields to 16-year highs has cast a shadow over the stock market, exacerbated by the Federal Reserve's hawkish stance last week.
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In Asian trading hours, the yield on 10-year Treasury notes (US10Y) decreased by 0.8 basis points to 4.589%, pulling back from the fresh 16-year peak of 4.688% reached on the previous day. Federal Reserve Bank of Richmond President Thomas Barkin stated that the central bank's decision to keep rates steady earlier this month was the right call, and it remains uncertain whether further monetary policy changes will be required in the coming months.
In the foreign exchange market, the dollar index (DXY) eased by 0.057% to 106.10 but remained close to the 10-month high of 106.84 achieved earlier in the week. The index has gained 2.4% this month, marking its second consecutive month of gains.
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