From Marc Chandler at Bannockburn Global Forex:
Overview: The re-opening of China's mainland market amid reports of strong activity during the holiday, was relatively subdued. The CSI 300 rose less than 0.5% and the Shanghai Composite eked out less than a 0.2% gain. The 0.5% gain in the yuan was largely in line with the performance of the offshore yuan. Indeed, it seems like a bit like "buy the rumor sell the fact" type of activity as Hong Kong's Hang Seng tumbled 2.75%, to give back most of last week's gains. The same is true of the index of mainland shares that trade in Hong Kong.
The Federal Reserve, European Central Bank, and the Bank of England are expected to hike rates and this anticipation has seen equity markets stumble today. Europe's Stoxx 600, which rose almost 0.7% in the past two sessions is off 0.6% today. The UK’s FTSE 250 is off a little more than 1% today after rising about 1.15% last Thursday-Friday. US futures are trading sharply lower, as well. The bond markets are also under pressure. European yields are mostly 7-9 bp higher and the 10-year US Treasury yield is up four basis points to nearly 3.55%. March WTI initially extended its pre-weekend loss but has recovered to nearly unchanged levels around $79.60. In the currency markets, the euro is the strongest of the G10 as it tries again to establish a foothold above $1.09. The Australian dollar, the best performer last week (2%) is the weakest on a bout of profit-taking.Asia Pacific
Until there is a clear policy change, it is difficult to take seriously China's outgoing Premier Li Keqiang's claim the government desires more robust consumption. It may be one critical way the Chinese Communist Party can renew its "social contract" of limited political participation in exchange for rising living standards. Yet, at the same time, those foreign critics calling on China to boost consumption often talk in abstractions. Consider autos. Per 1000 people, the US has 800 cars, and the EU 600. China has around 200. Another example is meat consumption. The US per capita consumption is about 222 pounds. Europe's consumption is closer to 170 pounds of meat per person. China's meat consumption is a little less than 100 pounds. What is the environmental and health impact if China consumed like Americans or Europeans?Separately, reports suggest China is considering a ban on cutting-edge technology used to make solar wafers. These are very thin silicon pieces that are assembled into solar panels, and China accounts for an estimated 97% of global production. China's efforts in this space, which it practically monopolizes, have seen the cost of solar power fall by an estimated 90%. In efforts to decouple from China, the US, EU, and others are trying to build domestic capacity, which is hard to call restoring if they never had in the first place. If it does come to pass, some narratives will put it in the context of "typical" Chinese protectionism, while others may link it to the US "Inflation Reduction Act" that offers subsidies for green tech that is manufactured in the US....
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