On July 28, the Federal Reserve released its Beige Book, a compilation of anecdotal evidence that describes the current state of the economy. The latest Beige Book’s tone is consistent with data signaling an easing of the recovery. In June, each Federal Reserve district reported gains in activity, but the reports weren’t as rosy in July: Two districts reported no increase in activity while two others reported decreases in activity. Districts that did experience increases in activity indicated that gains were “modest.” (See RGE Critical Issue: “U.S. GDP Growth: Beige Book Consistent With H2 Slowdown“).
The MSCI Asia Pacific Index rose 1.1% to close at 119.43 while the MSCI Asia Apex 50 gained 0.1% to close at 754.25.
The Japanese NIKKEI 225 slid 0.6% to 9696.02. In Japan, economists have estimated that factory output increased 0.2% m/m in June, according to a Bloomberg report. The Japanese government has provided subsidies for fuel-efficient vehicles to stimulate consumption, but the incentives are scheduled to end in September. Slow growth may encourage the government to maintain the subsidies for an extended period.
In Hong Kong, the Hang Seng Index showed slim gains, rising to 21093.82.
The Shanghai Composite climbed 14.5 points or 0.5% to close at 2648.12.
India’s BSE SENSEX 30 jumped 0.2% to 17992.00. Although the Reserve Bank of India has already raised rates this week, an official from the central bank stated that the tightening of monetary policy needs to be more “aggressive.” Inflation has remained at 10-11% since February.
Australia’s S&P/ASX 200 closed at 4524.10 after falling 0.13%.
In South Korea, the KRX 100 was down 0.1% or 2.3 points to close at 3734.64. On July 28, the Bank of Korea announced that the country’s current account surplus had increased to US$5.04 billion in June from US$3.82 billion in May. (See RGE Critical Issue: “Have Risks to South Korea’s Current Account and Balance of Payments Eased?“).
On currencies, the renminbi, rupee and yen weakened against the dollar, while the rupiah, Aussie dollar, and kiwi gained.
The decrease in prices for 10-year sovereign bonds led to higher yields in Australia, India and Malaysia. Yields fell in Hong Kong, New Zealand and Indonesia.
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