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The Hang Seng Index closed up 243.95 points, or 0.98%, at 25,207.18 on Monday, July 27; the Hang Seng Tech Index closed up 72.54 points, or 1.57%, at 4,702.05; the H-share Index closed up 94.32 points, or 1.14%, at 8,365.38; and the Red Chip Index closed up 6.57 points, or 0.16%, at 4,125.78.On July 27th, the German Ifo Institute reported that its business climate index rose to 86.6 from a slightly revised 85.7 in June, exceeding analysts forecast of 86.0. This indicates that German business confidence improved more than expected in July, which will provide some relief to economic expectations for the beginning of the third quarter of 2026. The improvement in business sentiment may be related to reduced market uncertainty at the beginning of the month and the temporary easing of tensions between the US and Iran at the end of June. Notably, the expectations index rebounded to its highest level since February. However, considering the recent developments in the US-Iran conflict, analyst Justin Low believes that businesses will remain cautious and highly vigilant due to significant uncertainty and rising energy prices. Furthermore, the Strait of Hormuz remains closed, and the risk of shipping disruptions is spreading to the Red Sea region. Unless business or economic confidence shows a more sustained and stable recovery by the end of summer, a cautious approach should be taken towards this report.U.S. oil stocks fell in pre-market trading, with Chevron (CVX.N) down 2.7%, ExxonMobil (XOM.N) down 2.9%, and ConocoPhillips (COP.N) down 3.2%.Hong Kong stocks closed higher, with the Hang Seng Index rising 0.98% and the Tech Index rising 1.57%; MiniMax (00100.HK) surged over 17% and Xiaomi Group (01810.HK) rose over 7.3%.ECB Governing Council member Kazmir: Once the second wave of inflation takes hold, the cost of reversing it will be extremely high; the ECB must act before these effects materialize.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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