Analyst
On Saturday, China’s inflation data revealed consumer prices rose by 0.1% y/y in August 2023. This increase is after the first drop in over two years, at -0.3% in July. This shows that deflationary pressures seem to be easing. The producer price index, however, showed a narrowing drop from a fall of 4.4% in July to -3% in August.
China's credit demand has shown improvement. Such indicators are signaling that China's economic and financial markets might be on the path to stabilization. Furthermore, the People’s Bank of China took measures to strengthen the CNY against prolonged market movements, rebounding it from a 16-year low.
This improvement in China was reflected in an upturn in European stocks. The Stoxx 600 is currently trading higher by around 0.5%. However, investors are waiting for further data such as the U.S. inflation data on Wednesday (September 13) and the ECB interest rate decision on Thursday (September 14) - before that there will not be a big recovery (attempt).
US futures indicate a positive opening in New York, hinting at an improved sentiment at Wall Street. The recent rise is attributed to hopes of China’s economic stabilization and bets on the US curbing inflation without damaging growth.
The optimism emanating from China will probably remain for most of the day, given the overall quiet day in terms of economic events. Software giant Oracle will announce its results after the close of the stock market today.
The USD experienced a break in its four-day rally for now, declining against all of its Group-of-10 counterparts in early US trading. This downturn follows its record streak of weekly gains due to expectations of the Federal Reserve maintaining higher interest rates for extended periods. Investors are now awaiting the August inflation report to decipher potential US interest rate movements.
Over in Japan, the JPY surged by over 1% against the USD. Remarks from BOJ Governor Kazuo Ueda hinted at future decisions related to the bank's super-easy policy, dependent on wage rise trends. Ueda also indicated that the BOJ might reconsider its negative interest rate policy once the 2% inflation target is sustainably reached.
Oil prices showed a decline early this week, while gold prices rose above $1,920 per ounce. The U.S. inflation data will be decisive here for this week.
Key Earnings Report:
Oracle (ORCL)
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