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

US dollar has legs to go even higher, says Wells Fargo strategist

According to Wells Fargo Securities FX strategist Brendan McKenna, the US dollar has room to rise further thanks to interest rate differentials on the back of an aggressive Federal Reserve.

“We don’t think many of these international banks will be able to raise rates as aggressively as the markets have priced in,” he told CNBC’s “Squawk Box Asia.”

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

—Jihye Lee

Freight rates peaked earlier than expected as global trade slows, S&P says

Freight rates for containers and dry bulkers — or ships carrying raw materials and bulk commodities — 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 that the Baltic Dry Index – a barometer for the price of transporting key commodities by sea – is expected to fall about 20% to 30% for the year before recovering slightly in 2024. .

This underscores the mounting risks of a global recession as consumer demand declines against the backdrop of rising costs of living and inflation.

Read the full story here.

— Su-Lin Tan

Australia records record trade surplus; iron ore and coal exports fall

Australia recorded a record decline in its trade surplus, mainly due to declining iron ore and coal exports.

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Exports fell 10% in July from the previous month, while imports grew 5%, resulting in a contracted trade surplus of $8.7 billion AUD in July from A$17.1 billion the month before.

Capital Economics said the collapsed 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 decline in iron ore prices has not yet fully fueled iron ore exports. Indeed, with the RBA’s commodities price index in August 20% below its peak in May, it is clear that the trade surplus has peaked,” Capital Senior economist economics Marcel Thieliant said.

— Su-Lin Tan

Huawei launches first smartphone to connect to China’s rival for GPS

Huawei took the wraps of the Mate 50 smartphone, the latest attempt to stay relevant in the mobile market, even though it has lost a lot of ground due to US sanctions.

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

US sanctions against the company in the past three years have cut the company from key components and software and crushed its smartphone business.

Read the full story here.

–Arjun Kharpal

Goldman Sachs raises forecasts for Fed hike this year

Goldman Sachs revised its forecast for the coming year of the Federal Reserve’s interest rate decisions.

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

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It also expects a 25 basis point increase in December, citing officials’ recent aggressive comments.

The note said that Fed officials “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 3.5% year-on-year, better than estimates

Japan’s economy grew 3.5% year-on-year in the second quarter, beating estimates in a Reuters poll that forecast growth of 2.9%.

The economy grew by 0.9% quarter-on-quarter, official data shows.

According to Darren Tay, economist at Capital Economics Japan, spending growth in Japan will remain positive.

“Consumers have a big pot of pandemic-forced savings they can rely on,” Tay said on CNBC’s “Squawk Box Asia,” adding that investors are betting on a further widening of interest rate differentials between the Federal Reserve and a moderate Bank of Japan.

—Jihye Lee, Charmaine Jacob

CNBC Pro: Wall Street pro predicts when the S&P 500 will rise – and reveals how to trade it

Market volatility is here to stay, according to market veteran Phil Blancato.

But Ladenburg Thalmann Asset Management president and CEO sees a “strong rally” ahead as market conditions improve.

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

Pro subscribers can read more here.

— Zavier Ongo

All major averages close higher, Nasdaq makes 7-day losing streak

Brainard: Fed is in this ‘as long as it takes’

Federal Reserve Vice Chairman Lael Brainard pledged Wednesday to continue the central bank’s flight against inflation, saying rising prices are hurting lower-income households.

“We’ll be in this as long as it takes to bring inflation down,” Brainard said in prepared remarks before a speech in New York. “Until now, we have quickly raised key rates to the peak of the previous cycle, and key rates will need to rise further.”

Brainard said there were some examples of retail price drops, but there “could also be room for cuts” in the profit margins of auto companies in particular.

— Jesse Pound, Jeff Cox

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