Morning Report

Friday, 20 July 2018

  • Asian stocks searched for direction on Friday, with major markets hovering around breakeven.
  • President Donald Trump told CNBC he “wasn’t thrilled” with the Federal Reserve hiking rates.
  • The dollar eased from a one-year high following Trump’s comments.

Asian shares were muted on the last trading day of the week as investors searched for direction after stocks stateside slipped amid U.S. President Donald Trump’s criticism of the Federal Reserve, while the dollar eased from a one-year high.

Japan’s Nikkei 225 recorded marginal declines in morning trade, slipping 0.08 percent. The broader Topix hovered around the flat line, last trading higher by 0.03 percent. South Korean stocks were also little changed in early trade, with the Kospi edging higher by 0.06 percent. The S&P/ASX 200 tacked on 0.17 percent as the energy subindex led gains, climbing by 1.06 percent.

The sideways trade in Asia came on the back of slight declines seen stateside,with U.S. stocks slipping on Thursday as earnings season rolled on, with investors digesting comments from Trump on the Fed. Trump told CNBC on Thursday that he was “not thrilled” with the central bank hiking interest rates.

CBA forecasts U.S. growth to slow from 2020 amid higher interest rates and fading fiscal stimulus, and expects more comments from Trump on interest rates.

The Dow Jones Industrial Average declined 0.53 percent, or 134.79 points, to close at 25,064.50, the S&P 500 edged down by 0.4 percent to 2,804.49 and the Nasdaq Composite shed 0.37 percent to finish the session at 7,825.30.

Meanwhile, the dollar index, which tracks the U.S. currency against a basket of peers, last stood at 95.126. The index had touched a one-year high of 95.652 overnight before taking a dip on Trump’s Fed comments.

A weaker Yuan is China’s answer to Trump’s trade war. 

The People’s Bank of China set the Yuan midpoint rate at 6.7671 today – up 605 pips from the previous day’s fix of 6.7066. This is the biggest single day devaluation of CNY since June 2016. This devaluation is likely to have an impact on USD/INR and we expect Rupee to test a new low on account of Chinese Devaluation.

Source : Reuters

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