US trade deficit narrows sharply in August; China explores cross-border uses for digital yuan in new trial [CSOP Global Market Morning Report]

🔸 US trade deficit narrows sharply in August. The US trade deficit narrowed sharply in August as exports increased and imports fell, suggesting that trade could be a small drag on economic growth in the third quarter. The trade gap contracted 10.8 per cent to US$70.4 billion from a revised US$78.9 billion in July, the Commerce Department’s Bureau of Economic Analysis said on Tuesday. Trade has subtracted from gross domestic product for two straight quarters. Growth estimates for the third quarter are currently as high as a 3.2 per cent annualised rate.

🔸 China explores cross-border uses for digital yuan in new trial. China has kicked off a trial for cross-border payments using central bank digital currencies (CBDCs) with Saudi Arabia and other partners, eyeing alternative uses for the digital yuan amid its struggles in the home market. Other participants include Hong Kong, Thailand and the United Arab Emirates. Such international organizations as the International Monetary Fund and also taking part as observers.

🔸 BOJ’s Next Hike Likely to Come in January, Former Official Says. New Prime Minister Shigeru Ishiba won’t impede the Bank of Japan’s path toward raising interest rates, with January the most likely timing for its next hike, according to a former executive director in charge of monetary policy. That would be about a half year since the July rate hike and that’s also when the bank releases its latest economic projections. The BOJ will be watching three critical developments: the US presidential election, the trend in service prices this autumn and momentum in the run-up to next year’s annual wage talks.

🔸 Korea and India Join Key FTSE Russell Index After Bond Market Reform. South Korea will join FTSE Russell’s benchmark bond index next year, capping months of official campaigning and an overhaul of financial market infrastructure in the hopes of attracting tens of billions of dollars of foreign investment. The index provider is also adding India to its gauge of emerging market debt from 2025, according to a statement, citing officials’ efforts to improve market access.

🔸 Samsung (005930 KP) to invest in EV tech firm ChargeScape. South Korea's Samsung Electronics released on October 8 the consolidated financial report for July-September 2024 shows that operating profit increased by 3.7 times that of the same period last year, reaching 9.1 trillion won (about 47.8 billion yuan).

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