The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
2012 ET - Japanese stocks are higher in early trade as fears about the Fed's potential rate increases ease. Electronics and tech stocks are leading the gains. Panasonic Holdings is up 4.5% and SoftBank Group is 5.3% higher. The dollar is at 159.46 yen, compared with Y159.39 as of Thursday's Tokyo stock market close. Investors are closely watching any developments in the Iran conflict and crude oil prices. The Nikkei Stock Average is up 1.8% at 69523.56. (kosaku.narioka@wsj.com; @kosakunarioka)
2012 ET - The yen consolidates against other G-10 and Asian currencies but may be buoyed by prospects of BOJ rate increase. There's a media report that the "Takaichi government is supportive of a near-term interest-rate hike by the Bank of Japan," CBA's Carol Kong says in a research report. "Prime Minister Takaichi's preference of lower interest rates is widely considered to be a constraint on the pace of BoJ rate hikes," the economist and currency strategist says. "The market is currently pricing about a 70% chance of a 25bps BOJ rate hike at the September meeting," Kong adds. The dollar is little changed at 159.48 yen and the euro is flat at 183.96 yen, FactSet data show. (ronnie.harui@wsj.com)
2005 ET - JGBs rise in the morning Tokyo session, tracking overnight price gains in U.S. Treasurys. Both JGBs and Treasurys tend to move in tandem. "U.S. July PPI was soft," NAB's Ken Crompton says in commentary. U.S. PPI was flat in July versus the WSJ's consensus forecast for a 0.2% increase. The data were enough to "knock [September] Fed hike odds back under 40%," the head of Rates Strategy says. "In rates, yields are lower across the major sovereign markets," Crompton says. The 10-year JGB yield is down 2.5 bps at 2.845%. (ronnie.harui@wsj.com)
1946 ET - Japanese stocks may rise as concerns about the Fed's potential rate increases have eased following U.S. wholesale price data on Thursday. Nikkei futures are up 1.4% at 69310 on the SGX. The dollar is at 159.47 yen, compared with Y159.39 as of Thursday's Tokyo stock market close. Investors are focusing on any developments in the Iran conflict and crude oil prices. The Nikkei Stock Average rose 1.2% to 68308.59 on Thursday. (kosaku.narioka@wsj.com)
1941 ET - Australia is seeking an exemption from U.S. tariffs. Australian Prime Minister Anthony Albanese told reporters that President Trump has indicated he will consider the request, which was made during a phone call. Albanese requested a full exemption or, at the very least, no increase to the 12.5% tariff currently in place. During their conversation, he highlighted that Australia and the U.S. have maintained a free trade agreement for over 20 years and noted that the U.S. holds a trade surplus with Australia. (james.glynn@wsj.com; X @JamesGlynnWSJ)
1921 ET - The Reserve Bank of New Zealand has left current rules governing home-loan limits unchanged. The RBNZ's financial policy committee says it will maintain current loan-to-valuation ratios. The FPC considered house-price developments, the risk profile of recent mortgage lending, financial strain among existing borrowers and the resilience of the banking system, the RBNZ says. Housing risks are currently contained and house prices have remained broadly flat in recent years. Mortgage-lending growth has been modest and the share of higher-risk lending remains manageable, it says. Current debt-to-income restrictions also remain in place, it adds. (james.glynn@wsj.com; @JamesGlynnWSJ)Global equity market participants are starting to look back over their shoulders at the Middle East conflict. It's having less impact on sentiment as the gaze of traders returns squarely to artificial intelligence, and the opportunities it represents, says Steve Chiavarone, Deputy CIO for Global Equities at Federated Hermes. While the Iran conflict certainly retains the ability to impact the spot oil market, the medium-term trend of disinflation remains very much intact, he adds. The futures market for oil remains much calmer, with the December futures contract never trading above 85 US dollars per barrel this year, he adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
1815 ET - Sales to China played a role in boosting Applied Materials' revenue in the third quarter, and are expected to keep growing, CFO Brice Hill says on a call Thursday. Across the company's two main segments--semiconductor systems and applied global services--China represented 26% of revenue, he says. The company's China revenue should grow this calendar year, boosted by investments in the 28-nanometer foundry-logic process, Hill says, and continue growing next year. Shares are off 5% at $508.00 after-hours. (elias.schisgall@wsj.com)
1547 ET - Treasury yields keep falling as U.S. inflation moderates while the U.S.-Iran standoff continues. Odds of a Fed hike in September slip to 35% from 41% yesterday, according to CME, as markets increasingly bet on another hold. A 30-year Treasury auction has a high yield of 5.216%, the highest since 2001, though it was similar to current market pricing, indicating steady demand. The yield settles down 0.034 percentage point, at 5.212%. The University of Michigan consumer sentiment index is expected to edge higher to 54.5 from 54.4, according to WSJ consensus. The 10-year falls 0.051 p.p., to 4.640%, and the two-year slips 0.059 p.p., to 4.139%. (paulo.trevisani@wsj.com; @ptrevisani)
1503 ET - Livestock futures on the CME settled lower for the day, with live cattle and lean hog futures tumbling as the day progressed. For both contracts, the main push lower is stagnant consumer demand for beef and pork, the Hightower Report says in a note. Cutout prices for both are weaker, even though the Labor Day holiday is fast approaching, which is typically the last day of the grilling season in the U.S. Live cattle futures finished trading down 1.6% to $2.203 a pound, while hogs closed down 1.7% to 82.175 cents a pound. (kirk.maltais@wsj.com)
1459 ET - Crude futures settle lower after a string of gains with the U.S. and Iran both claiming to have control over the strategic Strait of Hormuz. "The stalemate in crude price movements comes at a time when we see no horizon for a return of constructive diplomatic momentum or a return to broad escalation, at least in the very short term," XS.com senior market analyst Samer Hasn says in a note.That will keep the region "in a state of no peace and no war," he says, with the possibility of major escalation keeping the risk premium high. The IEA's and OPEC's lowering of their demand forecasts, and the unexpectedly large build last week in U.S. crude inventories, could prevent sharp rises in oil prices, he adds. WTI settles down 2.4% at $81.25 a barrel and Brent falls 2.1% to $87.07. (anthony.harrup@wsj.com)
1445 ET - U.S. natural gas futures retreat after the EIA reports an above-estimate 36 Bcf weekly inventory build, extending the storage surplus to 198 Bcf from 195 Bcf, despite hot weather spurring high electricity demand. "What made today's EIA report probably sting a little more was optimism power burns have tightened over the past 1-2 weeks, which the EIA report suggested wasn't the case," NatGasWeather.com says in a note. "And it hasn't helped that wind energy generation has been strong the past few days when demand has been strong," including across Texas, the forecaster adds. Nymex natural gas settles down 2.7% at $2.727/mmBtu.
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