Australian ASX 200 Snaps Three Month Losing Streak in July with Aussie at Six Week High

The Australian share market broke a three-month losing streak with a 5.7% rise in July. The ASX 200 closed July on a seven-week high at 6945.2. Markets climbed a wall of worry in July with the worlds’ central banks raising rates as they fought to tighten against rising inflation. The month saw an onset of technical recession in the US, falling retail turnover reported by the ABS and Treasurer Jim Chalmer’s warning on Thursday of an economic slowdown. The Reserve Bank of Australia is expected to announce a 50-bps rate hike next Tuesday. The Aussie dollar closed at a six-week high, trading over US70¢.

The blue-chip S&P/ASX 200 benchmark is now 8 per cent higher than the lowest point of the year, achieved in mid-June, and reduces to 6.7 per cent the fall for 2022. The financial sector is the largest sector and accounts for a third of the index. The materials sector is the second largest by value. They for the ASX is a sound financial base with the banks and bonds and then with commodity and related segments of the economy.

Australian housing and inflation backdrop

  • Australia’s was Q2 PPI 1.4% qtr/qtr, as expected (last 1.6%); 5.6% yr/yr (last 4.9%).
  • June Private Sector Credit 0.9% m/m (last 0.8%)
  • June Housing Credit 0.6% m/m (last 0.6%)

The stock market’s recovery from June’s lows is a combination of a short squeeze and investors averaging down in the hope that hawkish rate rises from central banks will ease and the peak of inflation may be nearing, despite warnings record-high inflation is sticky and volatility will continue. Greed and the fear of moving are powerful stimuli.

The markets are at major turning points, a bear market rally or something more constructive. The Federal Reserve believes it has achieved neutral rates per Chairman Powell at the latest FOMC. It appears investor have now placed the Fed in front of the curve, with maybe another American Central Bank interest rate hike not happening until September. The danger for investors is this is but a bear market rally and trouble is ahead upon completion.

Iron Ore and China

Eyes are on iron ore’s price after its sizzling five-day rally came to halt Friday, with by a lack of fresh signals from Beijing that it will channel more funds toward China’s beleaguered property market. The mineral sank as much as 5 per cent after surging more than 20 per cent from its close on July 21. Investors are helpful more aid was on its way to revive construction projects stalled by a wave of repayment boycotts from homebuyers, but none came from during a key Politburo meeting.

in their April meeting CCP leaders spoke about “supporting local governments to improve real-estate policies,” Thursday’s meeting spoke of a broader directive to “stabilize the property market,” without specifically mentioning more supportive measures. Party leaders also delivered a generally downbeat assessment of economic growth prospects.

How the Aussie Dollar fared in July 2022

The Australian dollar rallied in July 2022 with stocks after an initial fall in June to close the month strongly having rallied against the US dollar. The stronger Aussie helped cover losses for overseas investors in the Australian stock market.

Equity indices in the Asia-Pacific region ended the week on a mixed note.

Indices with Friday’s and weekly closes.

  • Japan’s Nikkei: -0.1% (-0.4% for the week),
  • Hong Kong’s Hang Seng: -2.3% (-2.2% for the week),
  • China’s Shanghai Composite: -0.9% (-0.5% for the week),
  • India’s Sensex: +1.3% (+2.7% for the week),
  • South Korea’s Kospi: +0.7% (+2.4% for the week),
  • Australia’s ASX All Ordinaries: +0.8% (+2.3% for the week).

Friday gave an insight of much that impacts the region.

  • On Friday Japan’s Tokyo Core CPI increased at its fastest pace since 2014 in the July reading.
  • The approval rating of South Korea’s President Yoon has dropped to 28% from 32%.
  • China’s Ministry of Commerce noted that the foundation for a recovery in consumption is not solid and that more efforts are needed to increase consumption.
  • China’s June FDI 17.4% (last 17.3%)
  • Japan’s June Retail Sales 1.5% yr/yr (expected 2.8%; last 3.7%), June Industrial Production 8.9% m/m (expected 3.7%; last -7.5%), June Unemployment Rate 2.6% (expected 2.5%; last 2.6%). July Housing Starts -2.2% yr/yr (expected -1.2%; last -4.3%), July Household Confidence 30.2 (last 32.1), and June Construction Orders 15.5% yr/yr (last 19.5%). July Tokyo CPI 2.5% yr/yr (last 2.3%) and Tokyo Core CPI 2.3% (expected 2.2%; last 2.1%)
  • South Korea’s June Industrial Production 1.9% m/m (expected -0.4%; last 0.2%); 1.4% yr/yr (expected 2.0%; last 7.4%). June Retail Sales -0.9% m/m (last -0.2%)

How Global Indices fared in July 2022

 

From The TradersCommunity News Desk