Australia’s central bank sees encouraging signs in latest inflation data
Australia’s central bank said that inflation data out of the country has been “reassuring” in its minutes for its Aug 1 monetary policy meeting. In the minutes, the RBA noted that inflation had fallen further and been a little lower than expected in the June quarter, although services inflation remained sticky. The RBA board added the economy was expected to grow slowly moving forward, and this would help with the further moderation of inflation. However, the bank did not completely rule out further tightening, saying that “whether or not a further increase in interest rates is required would depend on the data and the evolving assessment of risks.”
— Lim Hui Jie
China stops reporting youth unemployment rate from August
China’s national bureau of statistics has suspended reporting the youth unemployment rate from August, with the category omitted from its July economic report released on Tuesday. A spokesperson said this was due to economic and social changes, and that the bureau is reassessing its methodology. Unemployment in the age 16 to 24 category has soared to record highs in recent months, and reached a record high of 21.3%, according to the June report. Read the full story here.
— Lim Hui Jie, Evelyn Cheng
China unexpectedly cuts interest rates on one-year loans by 15 basis points to 2.5%
China’s central bank unexpectedly cut key policy rates for the second time in three months on Tuesday. The People’s Bank of China said it cut the interest rate on 401 billion yuan ($55.25 billion) worth of one-year medium-term lending facility (MLF) loans from 2.65% to 2.50. The central bank also enacted a reverse repurchase operation of 204 billion yuan through seven-day reverse repos and cut borrowing costs to 1.8%, down from 1.9%.
— Lim Hui Jie
China’s July industrial output and retail sales miss expectations
China’s industrial production and retail sales figures for July both missed expectations, adding to the weak batch of economic data seen by the country. Industrial production increased by 3.7% year on year, missing the 4.4% expected by economists polled by Reuters. On a year-to-date basis, industrial production increased by 3.8% year-on-year. Separately, retail sales in China grew 2.5% year-on-year, with total retail sales reaching 3.68 trillion yuan in July, lesser than the 4.5% growth rate expected by the Reuters poll.
— Lim Hui Jie
CNBC Pro: ‘China has disappointed’: These are the top markets and stocks to invest in, according to the pros
Investors have been fleeing China markets in favor of others for much of this year, fearing its weak economic recovery. Here are some alternatives to China and the stocks to invest in, according to the pros, who also discuss whether Chinese stocks will make a comeback.
— Weizhen Tan
Japan second quarter GDP expands 6% on an annualized basis
Japan’s economy grew 6% on an annualized basis in the three months ended June, beating expectations of a 3.1% expansion from economists polled by Reuters. On a quarter-on-quarter basis, growth came in at 1.5% for the second quarter, almost double the 0.8% expected. The data showed the fastest rate of growth since the fourth quarter of 2020, when Japan recorded a 2.8% quarter-on-quarter growth and an annualized growth of 11.7%.
— Lim Hui Jie
CNBC Pro: Barclays names global stocks that are ‘most insulated as inflation falls’ – and gives two 60% upside
Barclays has identified several European stocks that could benefit from a falling inflation environment. The investment bank said its “disinflation winners” stock picks are particularly adept at operating in a disinflationary environment, with at least two picks expected to rise by more than 60% over the next 12 months.
— Ganesh Rao
Nvidia shares rally 7% Monday
Nvidia shares gained 7.09% during Monday’s main trading session. Monday’s gains come after a sell-off in the chipmaker’s stock the prior trading week, when it lost 8.56%. Morgan Stanley reiterated the stock as a “top pick” ahead of Nvidia’s earnings report. The firm cited the influx in AI spending and an “exceptional” supply-demand imbalance that looks to continue over the next several quarters. The stock has gained nearly 200% year-to-date.
Inflation expectations moved lower in July, Fed survey says
Consumers grew more confident last month that the inflation rate will continue to fall over the short and long terms, according to a New York Federal Reserve survey released Monday. The July Survey of Consumer Expectations showed that respondents expect inflation a year from now to be at 3.5%, down from the 3.8% projection in June. The three- and five-year outlooks also edged lower to 3% and 2.9% respectively.
Former Fed official Kaplan expects rate cuts in 2024
Former Dallas Federal Reserve President Robert Kaplan expects interest rate cuts next year, though he cautioned Monday about “crosscurrents” that could keep inflation high. “I don’t think the Fed will take any action in the September meeting, but I think an estimate that by the middle of next year, they’ll feel that it’s appropriate to cut rates isn’t unreasonable,” Kaplan said on CNBC’s “Squawk Box.” “I don’t know if it’ll turn out that way. But that’s as good an expectation as any I think at this point.” He hedged a bit, though, saying that high levels of government spending will put pressure on bond yields and could force the Fed to stay tight. “That’s the ‘x’ factor that’s hard for me to gauge,” Kaplan added.