The Australian economy expanded 0.1% qoq in Q4 of 2023, easing from an upwardly revised 0.3% rise in Q4 and coming less than market forecasts of 0.2%. This was the 10th period of quarterly growth but the softest pace in 6 quarters, amid subdued domestic demand, a further fall in fixed investment, and a drag from net trade. Household spending grew more (0.4% vs 0.3% in Q4), mainly on essential items like electricity, rent, food, and health. Government expenditure also rose (1.0% vs 0.8%), on extended benefits for households. At the same time, fixed investment shrank further (-0.9% vs -1.5%), with private investment down for the first time in 5 quarters due to drops in non-dwelling investment, ownership transfer costs, and total dwellings. Imports of goods and services rose 5.1% while exports just added 0.7%. The build-up of inventories partly offset the rise in imports. The household savings ratio fell 0.9% after rising in Q4. Yearly, the GDP grew by 1.1%, the least since Q4 of 2020.

European equity markets were headed for a higher open on Wednesday as investors look ahead to the European Central Bank’s policy decision this week. The ECB is widely expected to cut interest rates on Thursday for the first time since 2019, but markets will see whether a hot Eurozone inflation reading released last week would affect the ECB’s decision. Investors will also assess final Eurozone PMI data for May on Wednesday, as well as an earnings update from Spanish clothing firm Inditex. Euro Stoxx 50 futures rose 0.5% in premarket trade.

Asian equity markets mostly rose on Wednesday, tracking small gains on Wall Street overnight after data pointing to signs of a cooling US labor market reignited hopes for Federal Reserve interest rate cuts. Investors also assessed data showing Australia’s economy grew less than expected in the first quarter, while China’s May services activity expanded at the fastest pace in ten months. Shares in Australia, South Korea, Hong Kong and China advanced. Meanwhile Japanese stocks declined amid pressure from a rallying yen.

WTI crude futures held at four-month lows near $73 per barrel on Wednesday after sliding for five straight sessions, weighed down by signs of rising global supplies that coincided with an uncertain demand outlook. Industry data showed that US crude inventories jumped by 4.052 million barrels last week, reversing from a 6.49 million barrel decline in the previous week and defying market expectations for a 1.9 million barrel draw. US gasoline stocks also increased more than 4 million barrels last week, exceeding market forecasts. On Sunday, OPEC+ agreed to extend most of their supply cuts into 2025 but opened the door for voluntary cuts from eight member countries to be gradually unwound from October onwards. By December, more than 500,000 barrels per day is expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025.

The annual inflation rate in the Philippines edged up to 3.9% in May 2024 from 3.8% in the previous month, coming less than market estimates of 4%. This marked the highest reading since December 2023, driven by higher prices of housing & utilities (0.9% vs 0.4% in April) and transport (3.5% vs 2.6%). Meanwhile, prices ticked lower for food & non-alcoholic beverages (5.8% vs 6%), attributed to lower costs of vegetables, tubers, plantains, cooking bananas & pulses. Moreover, costs increased at a softer pace for alcoholic beverages & tobacco (4.2% vs 4.9%), clothing & footwear (3.4% vs 3.6%), health (2.9% vs 3%), recreation & culture (3.5% vs 3.8%), restaurants & hotels (5.3% vs 5.4%), and personal care & miscellaneous goods & services (3.4% vs 3.5%). Meanwhile, the core inflation rate which excludes food and fuel, edged down to 3.1% from April's 3.2%, the lowest level in two years. On a monthly basis, consumer prices rebounded to 0.1% in May 2024 from 0.1% fall in the prior month.

The au Jibun Bank Japan Services PMI was revised higher to 53.8 in May 2024 from a preliminary figure of 53.6. That said, the latest result was lower than April's 8-month peak of 54.3, marking the softest growth in the service sector since February. New orders rose solidly, but its growth rate eased for the first time in seven months. Meanwhile, foreign sales increased the most since the series was added to the survey in September 2014. Employment grew for the eighth month, and the rate of job creation was among the fastest on record. Outstanding work accumulated further, but the rate of rise was the slowest in 2024 so far. On the cost front, input price inflation eased but was still above the long-run average. Meantime, the rate of output charge inflation slowed from April's 10-month top but was still the third highest on record. Lastly, sentiment strengthened and was among the highest to date, helped by higher wages, a global economic recovery, and the weak yen.