Singapore monetary policy, Australia unemployment rate

SINGAPORE — Mainland China markets led the gains in Asia Pacific on Thursday as Australia’s unemployment rate fell and Singapore tightened monetary policy.

The Shenzhen component reversed its losses to rise 1.259%, with energy stocks rising 3.68% according to Eikon data. The Shanghai Composite rose 0.31% and the CSI 300, which tracks the largest stocks listed on the mainland, gained 0.49%.

The Nikkei 225 in Japan pared its losses and rose 0.73% while the Topix index was up 0.23%.

In South Korea, the Kospi rose 0.1% and the Kosdaq 0.46%.

The Australian S&P/ASX 200 was up 0.43%.

Australia added 88,400 jobs in June, official data showed, well above the 30,000 forecast by analysts polled by Reuters.

The country’s unemployment rate was 3.5%, lower than the 3.8% expected and a 48-year low, Reuters reported.

The Hang Seng index in Hong Kong slipped in early trading but was last 0.3% higher.

The central bank of the Philippines raised interest rates by 75 basis points in a surprise move aimed at tackling inflation. The benchmark PSE composite index fell 1.33% on Thursday, and the peso settled at 56.13 against the dollar.

MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.28%.

Singapore GDP, monetary policy

In economic data, Singapore’s Ministry of Trade and Industry said preliminary estimates show the country’s gross domestic product grew 4.8% in the second quarter of 2022 compared to the same period there. one year old. That’s up from 4% in the first quarter of the year, but below the 5.2% growth analysts expected in a Reuters poll.

The Monetary Authority of Singapore tightened monetary policy in an off-cycle move on Thursday. The central bank said it would refocus the midpoint of the exchange rate policy band, known as the nominal effective exchange rate of the Singapore dollar, back to its current level.

The slope and width of the strip will not change, the MAS said. The central bank manages monetary policy by setting the exchange rate, not interest rates.

The SGD should be supported in the near term by this surprise tightening, but stubbornly high inflation means we cannot rule out further MAS action in October.

“Inflation risks will definitely be addressed,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, told CNBC’s “Squawk Box Asia” on Thursday. He said the MAS had more bandwidth and flexibility because it had tightened the policy from the start.

Singapore’s Straits Times Index fell 0.79% on Thursday, while the Singapore dollar climbed to 1.3955 against the greenback after the announcement.

“The SGD should be supported in the short term by this surprise tightening, but stubbornly high inflation means we cannot rule out further MAS action in October,” according to an ING note on Thursday.

US Inflation Report

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Overnight in the US, stocks fell on the inflation report.

The Dow Jones Industrial Average fell 208.54 points, or 0.67%, to 30,772.79, while the S&P 500 slipped 0.45% to 3,801.78. The Nasdaq Composite fell 0.15% to close at 11,247.58.

The inversion of the US Treasury yield curve, seen as a signal of recession, widened in the United States on Wednesday. The 2-year yield last stood at 3.1983%, higher than the 10-year’s 2.9558%. Yields move inversely to prices.

Taiwanese chipmaker TSMC and Japan’s Fast Retailing are also expected to report results on Thursday.

Currencies and oil

The US dollar index, which tracks the greenback against a basket of its peers, briefly slipped below 108, but was last at 108.234.

The japanese yen weakened to 138.03 to the dollar, and the Australian dollar changed hands at $0.6779.

Oil futures rose in Asian trading. American crude edged up 0.57% to $96.85 a barrel, while Crude Brent climbed 0.68% to $100.25 a barrel.

— CNBC’s Jeff Cox and Yun Li contributed to this report.