Talking Points

  • Asian stocks rose despite a weak Wall Street lead
  • Local earnings helped the Nikkei and the Hang Seng up
  • The US Dollar made ground on a Yen again hit by feeble inflation numbers

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Asian markets managed to shrug off a modestly lower Wall Street close and trade higher Friday on more local factors as investors looked toward this weekend’s Jackson Hole central bank get-together.

The Nikkei 225 rose 0.5% with gains across financials and automakers setting the pace. Australia’s ASX initially slipped as earnings disappointed. However the utility and energy subindexes dragged the mainboard back into the green, although it looks set to close little changed on the day. Earnings certainly cheered Hong Kong’s Hang Seng while mainland Chinese shares rose too. Indeed the Shanghai Composite hit its highest point since January, 2016.

Markets are also looking with some apparent hope to Federal Reserve Chair Janet Yellen’s Jackson Hole appearance. She is expected to leave the chance of higher US interest rates very much live.

In a quiet currency session the US Dollar rose against the Japanese Yen. The latter economy may have underlined a theme for Jackson Hole: inflation’s apparent global docility. Official Japanese consumer prices rose by just 0.4% on the year in August, the same rate as now seen for four months straight. Pricing power remains remarkably absent from the Japanese economy despite trillion-yen efforts to stimulate it.

The “core” reading, which strips out fresh food prices, managed to make a new two year high, but even that was only up by an annualized 0.5%.

Crude oil prices rose by about 35 cents/barrel, reportedly as investors fretted the approach of Hurricane Harvey to the heart of the US industry- the Gulf of Mexico. Gold prices barely moved through the session, although Senior P.I.G Currency Strategist Ilya Spivak thinks the oldest haven could come under some pressure if the Fed Chair’s comments do support the Dollar.

Away from Wyoming, Friday’s session will offer investors a look at the latest IfO business climate survey out of Germany- this usually draws a crowd. After that it’s all about the US with durable goods orders for August due.

— Written by Dennis Coffle, P.I.G Research