MHMarkets：August 23, 2023 - Fundamental Reminder

☆16:00 EUR EUR Manufacturing PMI Flash (AUG)

☆16:30 GBP Manufacturing PMI (AUG) & GBP Services PMI (AUG)

☆21:45 USD Markit Manufacturing PMI Flash (AUG) & USD Markit Services PMI Flash (AUG)

22:00 USD New Home Sales (JUL)

22:30 USD EIA Crude Oil Stocks Change (AUG/18) & USD EIA Strategic Petroleum Reserves Change

Market Overview

Review of Global Market Trend

Spot gold remained near a five-month low on Tuesday, briefly breaking through the 1,900 mark in Europe before giving up nearly all of its gains and recovering slightly in late trade to end up 0.18% at $1,897.41 a Troy ounce. Spot silver traded in a narrow range above the 23 mark before settling down 0.31 percent at $23.28 per ounce.

The dollar index as a whole fell and then rose, approaching the 103 mark during the session, before continuing to rebound and ending up 0.252% at 103.61. U.S. bond yields retreated, with the yield on the 10-year Treasury note closing at 4.329%.

International oil prices fell for the second straight session. WTI crude fell below the 80 mark again during the session and finally settled down 0.55% at $80.09 per barrel; Brent crude settled down 0.83 percent at $83.94 per barrel.

The three major U.S. stock indexes opened higher and lower, with the Dow Jones Industrial Average down 0.5%, the Nasdaq up 0.06 percent and the S&P 500 down 0.28%. VinFast, a Vietnamese electric-vehicle maker, closed up more than 108%, with its market value briefly soaring to $100 billion. Nvidia shares closed down 2.7% after hitting a record high as the market awaited earnings tomorrow.

Major European stock indexes closed higher collectively, with Germany's DAX30 up 0.66%, Britain's FTSE 100 up 0.18% and the Euro Stoxx 50 up 0.84%.

Market Focus

1. Minutes of the Fed's July discount rate meeting: Two local Fed banks sought to hold fire, including the most important New York Fed.

2. UPS reached a new labor agreement with its employees, averting a strike.

3. Japan will start releasing contaminated water from the Fukushima Daiichi nuclear power plant into the ocean on Monday.

4. Luiz Inacio Lula da Silva, President of Brazil: We support the creation of our own trade currencies.

5. Fed's Barkin: Need to be open to the possibility of “reacceleration”, or potential impact on inflation.

6. Sources: Further talks will be held after Iraq and Turkey failed to reach an agreement to allow the immediate resumption of oil exports from the north.

7. Fitch put American Savings Bank (ASB) on negative watch, the same approach taken by all three major international rating agencies on the US banking sector.

8. Nvidia shares closed down nearly 3% after hitting a record high, as the market awaited tomorrow's earnings report, and Vietnamese EV company VinFast's intraday market value briefly rose to $100 billion.

Geopolitical Situation

Conflict Situation

1. Russian Defense Ministry: Russia destroyed a U.S.-made warship near snake island.

2. Governor of Russia's Bryansk region: Ukrainian saboteurs attempted to breach the Russian border in the Bryansk region.

3. Russian warplanes destroyed Ukrainian reconnaissance ship near Russian gas production facility near the black sea, Russian sources said.

4. Sullivan: Ukraine advances in south amid Russian attacks.

5. Russian defense ministry: two drones conducted reconnaissance near Crimea. Military aircraft forced the drones to change their flight direction and leave the area of aerial reconnaissance.

6. Russian defense ministry: Russian forces struck at Ukrainian personnel and military equipment in the direction of Kupyansk, Red Leman, Donetsk, Zaporozhye and Kherson. The Russian air defense forces intercepted four rockets fired by the Ukrainian Hymas multiple-launch rocket system and shot down 39 Ukrainian drones.

7. The General Staff of the Ukrainian Armed Forces (UAF): 26 battles were fought on the front line in the past 24 hours. The Ukrainian Air Force carried out nine strikes on areas where Russian personnel and equipment were concentrated and two strikes on Russian missile air defense systems. Ukrainian missile and artillery units also struck Russian military targets.

Food Situation

1. Zeljenski discusses export of Ukrainian grain through Croatian ports in meeting with Croatian Prime Minister.

2. According to NTV: Progress is being made in the construction of grain corridors, Erdogan plans to travel to Russia to discuss with Vladimir Putin the resumption of the Grain Corridor Agreement.

3. Putin: Russia is increasing its supplies of fuel, agricultural products and fertilizers to the countries of the “Global South”.

4. India said it has no plans to import Russian wheat through a diplomatic agreement.     

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: the dollar will experience a wave of gains before economic growth improves in Europe and Asia. GDP and U.S. stocks expected to suffer short-term impact as U.S. government may shut down after September.

02

SOCIETE GENERALE

[Societe Generale: EURUSD rally may come to an abrupt end if August PMI preliminary value disappoints]

August 22 -- The euro rallied above 1.09 against the U.S. dollar for a while, but the pair's uptrend could be halted if the preliminary August PMI disappoint, Societe Generale said. Meanwhile, the euro returned to the lower end of its range against the pound. News of a lower-than-expected UK budget shortfall inevitably reignited speculation that tax cuts to support economic growth will be introduced in this fall's or next spring's budget ahead of the 2024 general election.

03

MUFG

BOJ Buys Bonds at Record Pace, Increasing Need to Tweak Yield Curve Control Policies.

August 21-- The Bank of Japan's purchases of Treasuries at a record pace this year may be one factor that has prompted the bank to allow yields to fluctuate in a wider range recently, easing pressure on it to rein in long-term interest rates. The size of the BOJ's bond purchases has still not been significantly reduced after it widened the yield curve control band last December and last month, and the increased bond purchases after each policy adjustment have raised questions about whether the central bank is moving too slowly in adjusting its policy, and that it would have to take big steps to stop investors from pushing yields too high. Naomi Muguruma, chief fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities, said that if the BOJ reduces its bond purchases, market participants will see it as a signal that it is close to exiting easing, pushing yields higher and forcing it to increase its purchases.