Japan’s Nikkei rises 2% in mixed Asian session after Wall Street rebound

Europe’s economy is the world’s “number one” candidate for recession, Pictet Wealth Management said ahead of an expected massive hike by the European Central Bank.

Head of macroeconomic research Alexandre Tavazzi said this was due to soaring energy prices, leading to a loss of competitiveness for businesses.

He added that “other fundamentals” such as natural gas inventory levels would also be a key factor for his currency, which slipped below parity for the first time in 20 years.

—Lee Ying Shan

Malaysia’s central bank raised its interest rate by 25 basis points, according to a statement.

Bank Negara Malaysia cited elevated inflationary concerns and China’s strict border control measures as justification for its decision to raise the interest rate to 2.50%.

The central bank said Malaysia’s headline inflation is expected to peak in the third quarter of 2022 and adjustments to its monetary policy settings going forward will be in a “measured and gradual manner”.

—Jihye Lee

Reserve Bank of Australia Governor Philip Lowe said the central bank “acknowledges” that “the case for slowing the pace of interest rate increases is growing stronger as the level of the cash rate increases”.

National Australia Bank economist Tapas Stickland said Lowe’s remarks could “signal a shift to 25 basis point increases at some point.”

“Given the delays in the operation of monetary policy and the rapid rise in interest rates over the past four months, that could be soon, and a pause is also likely at some point,” he said. he said of Lowe’s remarks.

—Jihye Lee

Nio said U.S. restrictions on Nvidia chip sales to China will not affect the automaker’s business.

“We believe this will not impact our business operations,” Nio founder, chairman and CEO William Li said, according to a StreetAccount transcript of the company’s translation during an earnings call Wednesday.

“Based on our estimates, our computing power is sufficient for the development of our autonomous driving technology in AI training for now,” Li said.

Read the full story here.

— Evelyn Cheng

Oil prices rose, rebounding from losses in the previous session, following Russian President Vladimir Putin’s threat to halt oil and gas exports if European countries imposed price caps on Russian oil.

Brent crude futures climbed 1% to $88.88 a barrel, while US West Texas Intermediate gained 1.1% to $82.83 a barrel.

“The easing in global oil prices was prompted by concerns about slowing growth in China following August trade data,” according to a note from Mizuho.

—Lee Ying Shan

Freight rates for containers and dry bulk carriers – or ships carrying raw materials and bulk cargo – have fallen over the past three months, S&P said, adding that rates peaked earlier than expected in the second trimester.

S&P’s freight rate forecasting models also predicted that the Baltic Dry Index – a barometer of the price of transporting major commodities by sea – is expected to fall around 20% to 30% for the year before settling. recover slightly in 2024.

This underscores the growing risks of a global recession as consumer demand declines amid rising costs of living and inflation.

Read the full story here.

— Su-Lin Tan

Australia recorded a record decline in its trade surplus mainly due to falling exports of iron ore and coal.

Exports in July fell 10% from the previous month, while imports increased by 5%, leading to a reduced trade surplus of 8.7 billion Australian dollars in July, compared to 17.1 billion Australian dollars. Australian dollars the previous month.

Capital Economics said the declining trade surplus was “well below the analyst consensus of A$14.5 billion and even our low of the consensus forecast of A$10.5 billion.”

“The recent fall in the price of iron ore has not yet fully passed through to iron ore exports. Indeed, with the August RBA Commodity Price Index 20% below its peak of May, it is clear that the trade surplus has peaked,” Capital said. said Marcel Thieliant, senior economics economist.

— Su-Lin Tan

According to Wells Fargo Securities FX strategist Brendan McKenna, the US dollar still has room to climb even higher thanks to rate differentials on the back of a hawkish Federal Reserve.

“We think a lot of these international banks won’t be able to raise rates as aggressively as the markets expect,” he told CNBC’s “Squawk Box Asia.”

“So it’s sort of a combination of a more hawkish Fed and a less hawkish tightening cycle from those international central banks that are supporting the dollar for the rest of this year,” he said. declared.

– Jihye Lee

Huawei has unveiled the Mate 50 smartphone, its latest attempt to stay relevant in the mobile market even though it has lost huge ground due to US sanctions.

Huawei says it’s the first publicly released smartphone that can connect to China’s Beidou satellite network, a rival to America’s Global Positioning System (GPS) which was completed in 2020.

US sanctions against the company over the past three years have cut the company off from key components and software and wiped out its smartphone business.

Read the full story here.

–Arjun Kharpal

Goldman Sachs has revised its forecast for the next year of Federal Reserve rate decisions.

Analysts led by chief economist Jan Hatzius said in a note that the company expects a 75 basis point hike in September, compared to a previous forecast of 50 basis points, as well as an increase of 50 basis points in November, also revised. compared to a previous projection of 25 basis points.

He also expects a 25 basis point hike in December – citing officials’ recent hawkish comment.

The note said Fed officials “appeared to imply that progress toward inflation control has not been as uniform or as rapid as they would like,” the note said.

– Jihye Lee

Japan’s economy recorded annualized growth of 3.5% in the second quarter, beating estimates from a Reuters poll for growth of 2.9%.

The economy grew 0.9% quarter-on-quarter, official data showed.

Spending growth will continue to be positive in Japan, according to Darren Tay, an economist at Capital Economics Japan.

“Consumers have a large amount of pandemic-forced savings that they can rely on,” Tay said on CNBC’s “Squawk Box Asia,” adding that investors are betting on a further widening of credit spreads. interest between the Federal Reserve and a dovish Bank of Japan. .

–Jihye Lee, Charmaine Jacob

Market volatility is here to stay, according to market veteran Phil Blancato.

But the chairman and chief executive of Ladenburg Thalmann Asset Management sees a “strong rally” on the cards as market conditions improve.

It predicts when the rally will take place and names its top picks for trading volatility.

Pro subscribers can learn more here.

— Zavier Ong

Stocks rallied on Wednesday as Wall Street shrugged off concerns about aggressive rate hikes from the Federal Reserve.

The Dow Jones Industrial Average gained 435.98 points, or 1.40%, to end the day at 31,581.28. The S&P 500 rose 1.83% to 3,979.90 and the Nasdaq Composite rose 2.14% to 11,791.90, breaking a seven-day losing streak.

—Carmen Reinicke

Federal Reserve Vice Chairman Lael Brainard pledged on Wednesday to continue the central bank’s flight from inflation, saying rising prices were hurting low-income households.

“We’re here for as long as it takes to bring inflation down,” Brainard said in prepared remarks for a speech in New York. “So far, we have quickly raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further.”

Brainard said there were some examples of lower prices in the retail sector, but there “could also be the possibility of a reduction” in profit margins for automakers in particular.

—Jesse Pound, Jeff Cox