Asian equity markets ended today’s trading session mixed affected by the strengthening US Dollar, the Reserve Bank of Australia June meeting minutes and Moody’s lowering the credit rating for Australia’s big four banks in addition to investor’s focus on MSCI's decision on the inclusion of China’s A-stocks and Bank of Japan’s meeting minutes as well as its governor speech.
The strong US Dollar weighted on the Japanese Yen as well as its Australian counterpart pushing them in to weaker territories during the Asian trading session.
The US Dollar Strength was due the New York’s Federal Reserve Bank President William Dudley expressing his optimism on Monday about the US economy while also signaling the willingness by the Federal Reserve Bank to continue raising rates gradually.
In Japan, the stock market index rose by 0.8 percent or 162.66 points to settle at 20,230.41 which is its highest since August 2015 led by the weaker Japanese Yen and the bullish sentiment.
Meanwhile, the Chinese stock market index Shanghai Composite ended slightly lower at 3,140.30 dropping by 0.13 percent or 4.07 points as investors are focusing Morgan Stanley Capital International or MSCI for short decision on whether to include China’s A-stock to its emerging market index, which could benefit its market with more capital in-flows in the futures, after being turned down for three times.
Moreover, the equities are also under pressure from the liquidity conditions’ concerns over the market’s high interest rates indicating that the tight liquidity conditions will persist despite the country’s central bank continues money injections.
Elsewhere in Australian, the equity market were lower on today’s trading session with its index ASX200 shading 0.83 percent or 47.92 settling at 5,757.25.
The decline was led by the banking sector over the fallout from Moody’s downgrading Australia's banks, including the big four making their credit rating in line with Standard & Poor’s AA- rating, despite the weakening Australian Dollar that kept equity loses limited.
However, the downgrade is not expected to affect the banks funding costs or to limit them anytime soon.
Australia’s real estate sector also weighed on the whole stock market, as Morgan Stanley stated that Australia's real estate investment trusts face a combination of severe cyclical consumer slowdown and structural pressure from e-commerce, which is affecting retail margins and reducing demand for physical space.
Moreover, the Reserve Bank of Australia June minutes indicated that its was concerned about household debt and wage growth, even though it was positive about growth going forward, while holding cash rates steady earlier this month due to weak growth.
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