Chinese investors are selling the UST. Meanwhile, the earning season continues. What's going on in the markets?
China Worries the Markets
Good Monday, traders! The greenback has been regaining its strength, and so do we! Let's look at the main news that affects the markets today.
Party's Congress weakens the markets
The Chinese Communist Party's Congress ended on Sunday. The concern that China will stick to its ideology-driven policies sacrificing China's economic growth pulled HK50 significantly lower. The controversial party's decisions include the zero-tolerance approach towards Covid-19 and the "common prosperity" solutions that led to the collapse of the property market and the weakness of big technology companies.
Last week, the release of China's GDP was postponed due to the Congress, adding speculation that the authorities are trying to hide the economic slowdown. However, the figures published today showed an improvement in economic conditions with +3.9% versus the +3.3% expected. At the same time, retail sales came out significantly below the consensus with +2.5% versus the 3.1% expected. The HK50 index fell by 7.9% since the start of today's trading session and almost reached the 15 000 low. The next support in the focus of sellers will be on the 14 000 level.
At the same time, Alibaba stock lost over 11% in the pre-market.
Other news that is interesting to follow:
- The Japanese authorities made interventions of at least $30 billion to prop up its currency. Their actions pulled USDJPY towards the 146 level on Friday. Despite that, the pair has been moving higher today and has already retested 149.10.
- The earnings season continues! This week we will see the reports by Microsoft, Alphabet, GE, Visa, Meta, Mastercard, Amazon, Intel, and many other big companies! As usual, don't forget to check the forecasts for EPS and revenue before a release.
- The fears of economic slowdown in China drive the oil prices down. XBRUSD has fallen below $90, and XTIUSD plunged to $81.
- The EUR is coming through a volatile session with lower-than-expected German Flash Manufacturing PMI (45.7 vs. 46.9) and Eurozone's Flash Manufacturing PMI (46.6 vs. 47.9). At the same time, French Flash Manufacturing PMI outperformed the forecasts with 47.4 vs. 47 points expected. Meanwhile, the ECB is preparing another big rate hike this week.
- The ex UK Prime Minister Boris Johnson refused to participate in election of a new Prime Minister, leaving Rishi Sunak as the frontrunner. Rishi Sunak served as a chancellor in Boris Johnson's government. According to experts, markets trust Sunak's fiscal strategies.
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