Morning wrap (26.09.2022)

• Indices from Asia-Pacific trade lower at the beginning of a new week. S&P/ASX 200 drops 1.4%, Nikkei trades 2.6% lower and Kospi plunges 3%. Indices from China trade mixed. Moves can be seen as response to downbeat Wall Street session on Friday

• DAX futures point to a lower opening of the European cash session today

• British pound crashed further, following a massive sell-off on Friday. GBPUSD trades 2.5% lower, near 1.0560. However, the pair traded as low as 1.0350 earlier in the day - a record low for the pair

• GBP is in freefall following an announcement of new fiscal measures by the new government on Friday. Those measures are expansive, including massive tax cuts, that threaten to further fuel inflation

• According to exit polls, Italian right-wing parties won 41-45% votes combined in parliamentary elections, enough to form a ruling majority. Brothers of Italy performed best and its leader Giorgia Meloni is most likely to become the first female Italian prime minister in history

• The People's Bank of China will reinstate the FX risk reserve requirement at 20% for some forward contracts, in response to yuan depreciation. A move will reduce leverage on short yuan bets

• According to media reports, Chinese authorities ordered domestic banks to buy shares of domestic companies

• Japanese flash manufacturing PMI for September dropped from 51.5 to 51.0 while services gauge moved higher from 49.5 to 51.9

• Most cryptocurrencies are trading little changed on the day. Bitcoin trades 0.2% higher while Ethereum gains 0.4%

• Oil is pulling back. WTI drops 1.4% and trades near $78 per barrel

• Precious metals trade mixed - gold and silver drop while platinum and palladium gain

• USD and CAD are the best performing major currencies

GBP is the worst performing major currency today. The British pound is in freefall following the announcement of new budget measures that threaten to fuel inflation further. Source: xStation5