Morning wrap (20.07.2023)

• Asia-Pacific indices traded lower during Thursday's trading session, despite positive news coming out of China. Japan's Nikkei lost close to 1.2%, Australia's S&P/ASX 200 traded 0.05% above yesterday's closing levels and India's Nifty 50 held within yesterday's closes. The Hang Seng Index fared well, adding 0.4% on the day.

• The theme of the day's session in Asian markets was the PBoC's decision to lower the cross-border cost index, which will allow more capital inflows into China. Moreover, the USD/CNY pair's benchmark rate was set by the Bank well below previous forecasts, strengthening the yuan. There were also reports in the media of a possible stimulation of the economy by easing access to mortgages in China.

• In Australia, attention focused on the labour market report, which came in well above expectations, strengthening the Australian dollar and the New Zealand dollar. The unemployment rate came in at 3.5% against expectations of 3.6%. The economy added 32 600 jobs against 15 000 expected. 

• Antipodean currencies are also gaining on the wave of earlier decisions in China.

• DAX and S&P 500 index futures point to a slightly lower opening of the cash session on markets in Europe and the US. 

• Key topics in today's session include the CBRT interest rate decision, US jobless claims, US gas inventories and quarterly results from Johnson&Johnson, Abbott Laboratories, Philip Morris and American Airlines.

• Netflix shares cheapened noticeably shortly after the release of its quarterly results. Revenue came in below expectations, but earnings per share clearly beat analysts' expectations. The company reported a nearly 3% decline in revenue per user in Q2. Investors reacted particularly pessimistically to the downgraded Q3 earnings forecast (USD 8.5 billion in revenue versus USD 8.7 billion expected). 

• Tesla's results performed relatively well, beating investors' expectations on a number of fronts, nevertheless, the nearly 4 per cent drop following the release was triggered by comments from Musk, who communicated that the company would further reduce the price of its cars. This news puts pressure on the company's margins, which have been steadily declining for many quarters.

• In the semiconductor market, the key news was TSMC's results. Despite a 23% year-on-year decline in net profit, the results came in line with expectations. Analysts see signs of improvement in the company's business background in Q3, but the company has lowered its earnings forecasts for this year.

• The cryptocurrency market is seeing modest rises. Bitcoin gains 0.7%, Ethereum adds 0.8% and STELLAR adds over 11%. 

• Gold is trying to maintain its recent upward wave and is currently gaining 0.2% on a daily basis. 

Heatmap of the FX market showing the volatility on each currency pair at the moment. Source: xStation 5