The Big Question: Why EU and US officials kept mum about monetary policy direction in Jackson Hole?
Major equity markets in Asia started the week’s trading off in a mixed mode, as investors are keeping a close eye on the impact of a severe hurricane hitting several US states and looking for policy direction after central bankers refrained from hinting any monetary policy direction.
In the early hours of the Asian trading session on Monday, stock indexes in Japan, Australia and South Korea, which tend to track markets in the US, saw minor losses, while indexes in Greater China gained slightly.
In Japan, the Nikkei 225 was down 0.11 percent, trading at 19,430.65 before midday.
In South Korea, the KOSPI fell 0.38 percent to 2,369.48.
Down under, the ASX 200 dropped 0.72 percent to 5,702.60.
In Greater China, the Shanghai Composite Index gained 0.95 percent to 3,363.21 and the Hong Kong Hang Seng Index was up 0.62 percent, trading at 28,020.48.
Big market-moving news over the weekend was Hurricane Harvey, said to be the largest in over a decade to hit the US, and the silence on monetary policy direction from a gathering of central bankers in Jackson Hole, Wyoming, the US.
Energy markets are feeling on impact of Hurricane Harvey on refineries along the US Gulf Coast. Some major energy companies, including Shell and Petrobras, have already closed refineries in Taxes due to the weather conditions. The moves send US gasoline futures as much as 6 percent higher on Monday.
Investors are also digesting what central bankers said or didn’t say during their meeting late last week in Jackson Hole.
US Fed Chair Janet Yellen kept away from commenting on monetary policy or the strength of the US economy and inflation rates, giving no indication of any potential changes in the US monetary policy. Yellen focused on the positive post-financial crisis reforms of the financial system, in an apparent move to stand up against Republican lawmakers and President Donald Trump, who are arguing the reforms hurt the market.
ECB chief Mario Draghi also stayed mum about monetary policy in the euro zone and the recent rise of the euro.
The silence gave a fresh boost to the euro, as investors are trying to digest the news and weigh in on why the central bankers kept away from giving any hint of monetary policies.
Market-sensitive news to watch this week: Economic data from Japan, the US, Hong Kong and Australia later in the week; NAFTA talks; UK’s Brexit talks with the EU; and talks of tax reform in the US.
And, by the way, North Korea fired three ballistic missiles over the weekend. Though the launches failed, keep an eye on tensions on the Korean Peninsula.
Main Market Movers – Mid-day Asian Trading Session
|Indexes||Value at Midday||Daily Change|
|Japan-Nikkei Stock Average 225||19,430.65||-0.11%|
|China-Shanghai Composite Index||3,363.21||0.62%|
|Hong Kong-Hang Seng||28,020.48||0.62%|
|South Korea- KOSPI||2,369.48||-0.38%|
Bitcoin saw a serious drop on Monday during Asian trading session. Before midday, bitcoin was trading at $4,200.0, plunging 3.17 percent.
Ethereum also dropped 3.42 percent, trading at $336.59. The steep fall came after ethereum rose to more than $347 over night.
The Japanese yen gained a slight 0.14 percent against the US dollar at midday. The USD/JPY rate was at 109.17.
The Chinese yuan strengthened 0.08 percent against the greenback, trading at 6.6413 per dollar. The yuan has continued its climb from Friday, trading at 6.6413 per dollar before midday on Monday.
The Australian dollar lost 0.08 percent against the US dollar. The Australian dollar was trading at 1.2597 per dollar before midday.
WTI Oil was down 0.31 percent at $47.68 per barrel
Brent Crude gained 0.46 percent to $52.58 per barrel
Gold was up 0.23 percent to $1,294.04 an ounce
Business News across Asia
In China, one of the richest men and real estate tycoon Wang Jianlin and his Dalian Wanda Group is under pressure after rumors are widely circulated online about the company being under investigation by Chinese authorities. Though the rumors were disputed by Wanda, it has a taken a toll on the company’s Hong Kong-listed shares. On Monday, Wanda Hotel Development Co saw its share prices drop to the daily limit of 10 percent.
Take away: Chinese authorities have taken strict measures to curb what they consider irrational investments in overseas real estate, entertainment companies, etc. So far, officials are silent on the Wanda rumors, but surely the company and its outspoken boss is under some serious pressure.
In Japan, embattled Prime Minister Shinzo Abe’s approval rating is recovering from earlier plunges after a series of scandals and missteps. Abe’s approval rating has reached 46 percent, improving 4 percentage points from earlier this month. The recovery came after a major shake-up in cabinet members, but Abe still faces serious doubts among some Japanese voters, per Nikkei Asian Review.
Take Away: With Abe’s approval rating recovering but still facing serious doubts, the future of his economic policies, dubbed “Abenomics”, is still under a cloud of uncertainty.
In India: McDonald’s is under pressure from its employees, suppliers and mall operators after the US fast-food chain decided to close 169 restaurants across India. McDonald’s is in the middle of a legal battle with Indian partner Vikram Bashi. The closures could result in the layoff of more than 6,000 employees, per Times of India.
Take Away: The episode in one of the largest markets for McDonald’s could have a serious impact on its business operation in the country and its share prices.