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August 17th - Data released on Monday showed that Japans second-quarter real GDP grew by 0.3% quarter-on-quarter and 1.1% annualized quarter-on-quarter, compared to expectations of 0.5% and 2%, respectively. The lower-than-expected GDP growth complicates the process of further interest rate hikes by the Bank of Japan. Flat private consumption and a sharp contraction in capital spending in the second quarter indicate that the private sector remains cautious about spending, which could lead the Bank of Japan to adopt a more prudent stance at its next meeting, despite persistently high PPI and CPI continuing to pressure policymakers to take action. The yen may face renewed pressure due to the weak economic growth outlook, especially if the market lowers the probability of a September rate hike; meanwhile, government bond yields may decline as short-term tightening expectations weaken. While external demand partially offset this impact, it alone is unlikely to change the overall moderate economic trend.On August 17th, Futures News reported that the 7.7 magnitude earthquake on Flores Island, Indonesia, had a relatively small impact on the aluminum industry chain. In terms of production capacity distribution, bauxite, alumina, and the vast majority of electrolytic aluminum production capacity are concentrated in western Indonesia, generally more than 1400 kilometers from the epicenter. Even the nearest electrolytic aluminum plant—Huaqing Aluminum in Morowali, Sulawesi—is about 624 kilometers away, still outside the 300-kilometer damage radius. Coupled with the tsunami wave height of less than 0.4 meters, the actual supply impact was almost zero. In terms of prices, at most, there will be a short-term sentiment pulse of 0-1%, which is expected to be reversed within 1-3 days, without changing the medium-term trend.The Nikkei 225 index opened 115.75 points higher on Monday, August 17, a gain of 0.17%, to 68,829.55.Japans preliminary annualized GDP deflator for the second quarter was 2.6%, compared to 3.20% in the previous quarter.Japans nominal GDP grew at a preliminary rate of 1.2% quarter-on-quarter in the second quarter, compared with 0.60% in the previous quarter.

WTI advances toward $75.00 as China-related demand optimism offsets recession fears

Daniel Rogers

Jan 09, 2023 11:55

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In the early hours of Monday, WTI steadily climbs near the intraday high of $74.70 as bullish emotion competes with economic slowdown worries. Despite this, the weaker US Dollar and a light schedule allow buyers of black gold to maintain control following Friday's mixed performance.

 

In spite of this, the risk profile remains elevated in light of China's reopening of its borders after a three-year closure. On the same line, Guo Shuqing, party secretary of the People's Bank of China, made his remarks (PBOC).

 

Reuters, transmitting China unlock news, claimed that "about 2 billion journeys are anticipated this season, roughly doubling the volume of previous year, and recovering to 70% of 2019 levels," citing a statement from the Chinese government.

 

On the other side, PBOC's Shuqing stated, "The world's second-largest economy is likely to recover rapidly due to the country's optimal Covid-19 response and the continued implementation of its economic policies."

 

The US Dollar Index (DXY) fell the most in three weeks the day before, down 0.20% intraday to 103.70 as of press time, as the US employment report failed to excite greenback purchasers and the US activity numbers stoked fears of an economic slowdown. It's worth mentioning that the previous day's disappointing US wage growth, ISM Services PMI, and Factory Orders weighed on Treasury bond yields and the DXY.

 

On a different page, reports regarding a delay in the restoration of the colonial pipeline and the Russia-Ukraine conflict appear to also benefit energy buyers. Traders fear additional rate hikes ahead of the release of the Consumer Price Index (CPI) for December from China and the United States on Wednesday and Thursday, respectively, which tests the positive momentum.

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