Morning Wrap (10.12.2024)

• Tuesday's Asian session saw modest gains in the quotations of most stock market indices, even though moderate downward pressure was evident on Wall Street yesterday. The exception in this aspect is the Chinese market, where futures there are losing heavily and thus reducing the wave of optimism from yesterday.

• Despite the pullback in Chinese stocks, President Xi reported that he is confident that the country will achieve its economic target for this year, which is GDP growth of around 5%. However, the favorable tone of the comments is disrupted by the foreign trade balance report, where once again we see readings well below expectations. Imports fell by 3.9% y/y and exports rose by 6.7% against expectations of 8.5%.

• The RBA decided to keep interest rates unchanged at 4.35%, in line with market expectations. However, the statement softened the Bank's previously hawkish stance. The report may say that the bank is gaining confidence that inflationary pressures are falling in line with recent forecasts, and the statement removed the “excluding nothing” statement.

• RBA Bullock's comments, however, turned out to be a bit more hawkish. The banker commented that some of the data was slightly weaker than expected, which gave the board some confidence that inflationary pressures are abating, but in vain to look for a definitive victory over inflation. 

• Bullock maintains that core inflation remains too high, but at the same time, when asked about rate cuts in the near term, she did not outright reject the idea. Investors are currently pricing in a ~56% chance of a 25 basis point rate cut next February. 

• There aren't many key publications scheduled on the economic calendar today for the economy and investors themselves, but investors' attention may nevertheless turn to the final CPI data from Germany. 

• In the forex market, big movements are currently observed on the Australian dollar, which is losing heavily to other currencies after the RBA decision. The NZD is also losing strongly. 

• Bitcoin is currently stabilizing in the $97,000 zone after yesterday's sell-offs. 

• Gold is extending gains after breaking out of consolidation and is currently trading near $2,670 per ounce. 

Heatmap of volatility in the FX market at the moment. Source: xStation