Japan’s Nikkei rises 2% in mixed Asia session following Wall Street’s rebound rally

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

Brent crude futures climbed 1% to stand at $88.88 per barrel, while U.S. West Texas Intermediate added 1.1% to $82.83 per barrel.

“The easing in global oil prices was brought about by concerns around slower growth in China following the August trade data,” according to a Mizuho note.

—Lee Ying Shan

Freight rates for containers and dry bulkers — or vessels carrying raw materials and bulk goods — have fallen over the past three months, S&P said, adding that rates peaked earlier than expected in the second quarter.

S&P’s Freight Rate Forecast models have also predicted the Baltic Dry Index — a barometer for the price of moving major raw materials by sea — is expected to fall about 20% to 30% for the year before recovering slightly in 2024. 

This underscores the increasing risks of a global recession as consumer demand retreats amid rising cost of living and inflation.

Read the full story here.

— Su-Lin Tan

Australia posted a record drop in its trade surplus mainly due to falling iron ore and coal exports.

Exports in July fell 10% from the month before while imports rose 5%, resulting in a shrunken trade surplus of $8.7 billion Australian dollars in July from A$17.1 billion the month before.

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

“The recent fall in the iron ore price hasn’t fully fed through to iron ore exports yet. Indeed, with the RBA’s commodity price index in August 20% below its peak in May, it’s clear that the trade surplus has peaked,” Capital Economics senior economist Marcel Thieliant said.

— Su-Lin Tan

The U.S. dollar has room to inch up even higher thanks to rate differentials on the back of a hawkish Federal Reserve, according to Wells Fargo Securities FX strategist Brendan McKenna.

“We think a lot of these international banks will not be able to raise rates as aggressively as the markets are priced in for,” he told CNBC’s “Squawk Box Asia.”

“So it’s kind of a combination of a more hawkish Fed and a less hawkish tightening cycle from these international central banks that support the dollar over the remainder of this year,” he said.

–Jihye Lee

Huawei took the wraps off the Mate 50 smartphone, its latest attempt to stay relevant in the mobile market even as it has lost a huge amount of ground due to U.S. sanctions.

Huawei claims this is the first smartphone released to the public that can connect to China’s Beidou satellite networking, a rival to the U.S. state-owned Global Positioning System (GPS) that was completed in 2020.

U.S. sanctions on the company over the past three years have cut the company off from key components and software and crushed its smartphone business.

Read the full story here.

–Arjun Kharpal

Goldman Sachs revised its forecasts for upcoming Federal Reserve rate decisions year.

Analysts led by chief economist Jan Hatzius said in a note that the firm expects a 75-basis-point hike in September, up from a previous forecast of 50 basis points, as well as a 50-basis-point hike in November, also revised from a previous projection of 25 basis points.

It also expects a 25 basis point hike in December — citing officials’ recent hawkish commentary.

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

–Jihye Lee

Japan’s economy grew an annualized 3.5% in the second quarter, beating estimates from a Reuters poll forecasting a 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, economist at Capital Economics Japan.

“Consumers do have a large pot of pandemic forced savings that they can rely on,” Tay said on CNBC’s “Squawk Box Asia,” adding that investors are betting on further widening of interest rate differentials 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 president and CEO of Ladenburg Thalmann Asset Management sees a “strong rally” on the cards as market conditions improve.

He predicts when the rally will be, and names his top picks to trade the volatility.

Pro subscribers can read more here.

— Zavier Ong

Stocks rallied Wednesday as Wall Street looked past concerns about aggressive rate hikes coming 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 ticked up 2.14% to 11,791.90, breaking a seven-day losing streak.

—Carmen Reinicke

Federal Reserve Vice Chair Lael Brainard pledged on Wednesday to continue the central bank’s flight against inflation, saying that rising prices were hurting lower income households.

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

Brainard said there was some examples of prices coming down in the retail sector but that there “also could be scope for reduction” in the profit margins of auto companies in particular.

— Jesse Pound, Jeff Cox