Morning Brief – Asian equities higher

The Asian trading session saw strong gains in stocks as trader and investors reacted positively to falling CPI inflation inside the United States economy.

Asian equity markets posted solid gains all around with Japan’s Nikkei 225 advancing by +1.3% and China’s Shanghai Composite gaining +0.7%. The strongest was Hong Kong’s Hang Seng with a 2.3% intraday gain.

Another major theme was US dollar weakness. The spillover continues yesterday with the US dollar suffering crushing losses against the euro, yen, antipodeans, the British pound and the Canadian dollar.

Consumer inflation expectations were released in Australia, and they stood at 5.2% in July 2023, unchanged from the previous month and compared with market forecasts of 5.1%.

The latest figure underscored a recent statement from the country’s central bank governor Philip Lowe that inflation expectations were well anchored for now, but that cannot be taken for granted as service price inflation remained elevated.

The board has projected headline inflation to return to the top of the bank’s target of 2 to 3% by mid-2025, a slower path than many other economies as policymakers want to preserve substantial gains in the labour market.

In the first three months of the year, the annual inflation rate fell to 7.0% from a more than 30-year high of 7.8% in Q4. On a monthly basis, consumer prices rose by 5.6% yoy in May, the least in 13 months.

China’s Customs Bureau said that H1 2023 exports were +3.7% y/y, while imports were -0.1% y/y, saying that “sluggish global economic growth, slowing global trade and investment, geopolitical risks and weakening external demand continue to impact China’s trade.”