Morning wrap (20.09.2023)

• Wall Street closed lower on the day before the Fed's interest rate decision, with the SP500 and Nasdaq 100 both ending 0.22% lower.

• Yields on U.S. 5- and 10-year bonds reached their highest levels since 2007. Most major sectors within the S&P 500 declined, but the index recovered losses after hitting session lows.

• Instacart, the online grocery delivery service, soared over 12.0% during its debut on the Nasdaq.

• Similarly, major indices in the Asia-Pacific region closed slightly lower. The Japanese Nikkei 225 fell by 0.56%, the Korean Kospi dropped by 0.30%, and the S&P ASX 200 lost 0.40%.

• Chinese indices experienced a decline of around 0.70%. Despite initial significant losses following the People's Bank of China's interest rate decision, the indices managed to recover some of the losses.

• The People's Bank of China (PBoC) maintained its benchmark lending rates at historically low levels on Wednesday. PBoC is seeking a balance between supporting the economy and preventing further yuan weakening.

• The one-year interest rate (LPR) remained at 3.45%, while the five-year interest rate (LPR), which determines mortgage interest rates, stayed unchanged at 4.20%.

• The central bank of China stated that it has enough room to support economic recovery, raising expectations that further monetary policy easing, including interest rate cuts, may occur after a month-long pause.

• Japan released its trade balance data, showing a deficit of -930.5 billion yuan in the last month of August. Both imports and exports fell less than expected, declining by -17.8% YoY and -0.8% YoY, respectively.

• The Gulf Cooperation Council (GCC) and the United States issued a joint statement reiterating their call for Iran to fully cooperate with the International Atomic Energy Agency (IAEA).

• Japan's Vice Minister of Finance for International Affairs, Kanda, who is considered the top authority on currency exchange rates in Japan, stated that the Japanese government and the Bank of Japan (BoJ) are closely monitoring the yen's exchange rates in the forex market, particularly USDJPY. Kanda also emphasized ongoing communication with the U.S. on this matter.

• The Japanese yen is weakening against the dollar today. USDJPY is in a sensitive area that has historically raised political concerns. USDJPY has risen by 0.10% to 147.900 today.

• In the energy commodities market, mainly declines are observed, with oil retreating from around $95 per barrel and currently trading at $93.5 per barrel.

• The cryptocurrency market has also seen some setbacks, with Bitcoin experiencing minor declines but still holding above $27,000 USD.

On the HSCEI index (CHN.CASH), we witnessed declines at the open following the PBoC's interest rate decision. However, the index managed to recover some losses and is currently trading at a slight -0.16% decline.