Morning Wrap (28.06.2023)

• Indexes from the Asia-Pacific region traded mixed during today’s session. Nikkei rose by 1.1%, S&P/ASX 200 gained 0.9% and Kospi fell by 0.5%. Chinese indexes underperformed and dropped by 0.3%.

• Asian stocks were mixed, influenced by a positive Wall Street rally driven by US consumer confidence and home sales.

• European futures contracts for indexes indicate a flat opening of the cash session on the Old Continent.

• The Australian dollar declined by 1% due to weaker-than-expected inflation data, potentially pausing rate hikes, while the yen strengthened following verbal intervention in Tokyo.

• Wall Street responded positively to the latest data highlighting economic resilience, despite the implication of continued tight Federal Reserve policy.

• Tech megacaps, including Tesla, Snowflake, and Meta Platforms (Facebook's parent), led the rebound in equities, with Nasdaq 100 up almost 2%, while Alphabet underperformed due to concerns about Google's fast-paced AI expansion.

• US stock futures fell after a late-breaking Wall Street Journal report that the Biden administration was considering new restrictions on artificial intelligence chip exports to China

• Goldman Sachs CEO believes it is unlikely for inflation to reach 2% soon, and the US might experience a period of low growth (0-1%) and higher inflation (4%).

• Australian CPI for the year came in at 5.8%, lower than the forecast of 6.1% and previous 6.8% figure, indicating weaker inflationary pressure.

• Russian gasoline exports decreased by 30% in June compared to May, while gasoline production at Russian refineries increased by 3.1% year-on-year.

• US President Biden expresses confidence in the strong economy, ruling out the possibility of a recession.

• Hawkish European Central Bank officials are considering options to accelerate the reduction of the institution's €5 trillion ($5.5 trillion) bond holdings.

The Australian dollar AUDUSD suffered a decline as May's monthly inflation data showed a figure of 5.6%, significantly lower than the consensus estimate of 6.1%. While core measures remained above 6%, it was the headline number that had an immediate impact on the market, leading to a depreciation of the AUD. As a result of this data, it is likely that the Reserve Bank of Australia will maintain its current cash rate at the upcoming meeting on July 4th.