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Monetary Policy of Singapore, Unemployment Rate in Australia

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SINGAPORE. Hong Kong stocks briefly fell more than 1%, while Asia-Pacific markets traded higher on Thursday. The move came after Singapore tightened monetary policy and Australia announced a reduction in unemployment.

The Hang Seng index fell 0.22% to 20,751.21 at the close.

Mainland Chinese markets were mixed. The Shenzhen Component recouped previous losses, climbing 0.75% to 12,602.78, while the Shanghai Composite edged down to 3,281.74.

In South Korea, Kospi shed 0.27% to 2322.32, while Kosdaq rose 0.38%.

The Philippine PSE Composite Index fell 0.12% to 6,248.13 on Thursday, while the peso stood at 56.1 against the dollar. The country’s central bank unexpectedly raised interest rates by 75 basis points in an attempt to fight inflation.

The broadest Asia-Pacific MSCI stock index outside of Japan fell 0.16%.

Asian stocks rise

Shares rose elsewhere in Asia.

Japan’s Nikkei 225 cut losses and rose 0.62% to 26,643.39, while the Topix rose 0.23% to 1,893.13.

The Australian S&P/ASX 200 rose 0.44% to 6650.6.

Official data showed Australia added 88,400 jobs in June, far more than the 30,000 that analysts polled by Reuters had predicted.

The country’s unemployment rate stood at 3.5%, below the expected 3.8% and a 48-year low, Reuters reported.

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 by 4.8% in the second quarter of 2022 compared to the same period a year ago. That’s up from the 4% in the first quarter of the year, but less than the 5.2% rise analysts had expected in a Reuters poll.

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

According to MAS, the slope and bandwidth will not change. The central bank manages monetary policy by setting the exchange rate, not interest rates.

This unexpected tightening should support SGD shortly, but stubbornly high inflation means we cannot rule out further action by the MAS in October.

“Inflation risks will certainly be eliminated,” Vishnu Varatan, head of economics and strategy at Mizuho Bank, told CNBC’s Squawk Box Asia on Thursday. He said that MAS has more capacity and flexibility because they tightened the policy in advance.

Singapore’s Straits Times index fell 1.15% on Thursday afternoon, while the Singapore dollar edged up to 1.4001 against the US dollar following the announcement.

“This unexpected tightening should support SGD shortly, but persistently high inflation means we cannot rule out further action by the MAS in October,” ING said in a note on Thursday.

US inflation report

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Overnight US stocks fell following the inflation report.

The Dow Jones Industrial Average fell 208.54 points, or 0.67%, to 30,772.79 and the S&P 500 fell 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 a recession, widened on Wednesday in the US. The yield on 2-year bonds was last at 3.2151%, up from 2.9799% for 10-year bonds. Yields vary inversely with prices.

Taiwanese chip maker TSMC reported a 76.4% increase in net profit in the second quarter. Revenue also jumped 36.6% year-over-year. The company’s shares rose about 1% on Thursday.

Japan’s Fast Retailing posted a 57.1% increase in net income for the nine months ended May 31, 2022, Reuters reported.

Currency and oil

The US Dollar Index, which tracks the US dollar against a basket of its peers, briefly slipped below 108 but was last at 108.476.

The Japanese yen fell to 139.21 per dollar and the Australian dollar changed hands at $0.6757.

Oil futures fell in afternoon trading in Asia after rising in the morning. US crude fell 1.47% to $94.88 a barrel, while Brent crude fell 1.24% to $98.34 a barrel.

— Jeff Cox and Yoon Lee of CNBC contributed to this report.

#Monetary #Policy #Singapore #Unemployment #Rate #Australia

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