Morning wrap (26.07.2023)

• The Asia-Pacific indices recorded a mixed session today. Japan's Nikkei futures are up 0.3%, the Australian S&P/ASX 200 is trading 0.5% higher and Chinese futures are 0.3% lower.

• Investors cut their positions to limit risk ahead of the Federal Reserve's rate announcement on Wednesday, impacting Chinese share markets.

• Hong Kong markets, especially tech stocks, declined, Japan and South Korea's equities - Kospi 200 also decreased by 0.9%.

• Australian stocks rose as inflation came lower than expected. The Australian dollar and government bond yields fell.

• Australian CPI was reported to be at 0.8% QoQ and 6.0% YoY, versus 1.0% and 6.2% forecasted

• In a surprise move, China dismissed its foreign minister and appointed Pan Gongsheng as the central bank governor.

• The S&P 500, Nasdaq 100, and Dow Jones Industrial Average all performed well due to increased consumer confidence in the US. The success of tech stocks is tied to anticipation about earnings season and artificial intelligence prospects.

• The Japanese Leading Indicator Change was revised to 1.1, falling from the previous 1.4.

• IMF's chief economist, Pierre-Olivier Gourinchas, stated that Japanese inflation pressure might exceed the target, thus posing an upside risk. He advised Japanese authorities to maintain the accommodative monetary policy, but to prepare for possible rate hikes, suggesting a shift away from the current yield-curve control.

• Goldman Sachs now sees RBA peak Cash Rate at 4.6% vs 4.85% before

• Microsoft reported that over 11,000 clients are awaiting its Azure OpenAI product.

• Morgan Stanley expects a 'comfortable' soft landing for the US economy with a 1.3% y/y GDP increase.

The Australian dollar (AUDUSD) weakened following lower than expected CPI inflation and lower target interest rate forecasts from the Reserve Bank of Australia (RBA).