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Global Market Quick Take: Asia – December 29, 2023
Summary: USDJPY initially declined to 140.25 before recovering to close at 141.41 in New York and trading around 141.20 this morning in Asia. The renminbi strengthened as USDCNH dropped by 0.5% to 7.1183, boosted by Chinese exporters repatriating revenues and increased northbound flows into A shares. Both Hong Kong and mainland stocks had a widespread rally, with the Hang Seng Index surging 2.5% to settle at 17,044, and the CSI300 gaining 2.3% to reach 3,415. Meanwhile, key US indices had minimal movements, with the S&P 500 ticking up by less than 2 points to 4,783, and the Nasdaq 100 sliding 0.1% to 16,898.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
US Equities: Key US indices had minimal movements on Thursday. The S&P 500 ticked up by less than 2 points to 4,783, while the Nasdaq 100 slid 0.1% to 16,898—both just shy of their highest closes in history. AMD extended its streak of gains, rising by 1.8%. Apple edged up 0.2% after a US federal appeal court suspended the import ban on Apple Watches.
Fixed income: Treasuries retraced in prices, with yields rising approximately 4-5 basis points across the yield curve. The market's reaction to a slightly larger-than-expected rise in initial jobless claims released in the morning was muted. Yields began to climb as the auction time for $40 billion 7-year notes at 1p.m. approached. The auction went poorly, with notes awarded at 3.859%, higher than the 3.84% observed around the auction deadline. As a result, the 10-year yield finished 5 basis points higher at 3.84%. The cash Treasury market will close early at 2 pm Eastern Time on Friday.
China/HK Equities: On Thursday, stocks on both Hong Kong and mainland exchanges staged a broad-based rally. The Hang Seng Index surged 2.5% to settle at 17,044, with notable outperformance in EV, digital health, solar, beverage, China developers and property management, as well as insurance names. Geely jumped 6.7% on the back of strong pre-orders for its newly launched EV model, Zeekr 007. In the mainland, the CSI300 gained 2.3% to reach 3,415, with northbound investment into A shares reaching RMB13.5 billion—marking the largest daily inflow since July.
FX: The renminbi rallied, with USDCNH dropping by 0.5% to 7.1183, driven by Chinese exporters repatriating revenues as the year-end approached and increased northbound flows into A shares. USDJPY extended its decline, reaching 140.25 at one point before rebounding to finish at 141.41 in New York and trading around 141.20 in the Asian morning on Friday. On the other hand, the euro and sterling retreated by 0.4% and 0.5%, respectively, against the dollar, settling at 1.1061 and 1.2733. AUDUSD consolidated, edging down 0.3% to 0.6825 after reaching a recent high at 0.6871.
Commodities: WTI and Brent crude oil fell 3.2% and 2.5% to $71.77 and $77.56, respectively, as shipping companies planned to resume transit through the Red Sea after a temporary suspension. Despite the US Energy Information Administration (EIA) reporting a significant 7.11 million barrel decline in US crude inventories from the previous week, this news did not provide substantial support to crude oil prices. Spot gold reached a recent high at $2088.5 but failed to sustain the momentum, retracing to trade around $2,067 in the Asian morning on Friday.
Macro:
- US initial jobless claims increased to 218k from the revised figure of 206k (initially reported as 205k) last week, surpassing the street economists' forecast of 210k. Meanwhile, continuing claims rose to 1,875k from 1,861k, in line with expectations.
Macro events: US Chicago PMI (Dec)
- Maine elections official disqualifies Trump from presidential primary ballot (Reuters)
- Boeing urges 737 MAX inspections for possible loose bolt (Reuters)
- China’s Richest Provinces Promise to Take Lead in Driving Growth (Bloomberg)
- Chinese e-commerce firms JD.com and Alibaba’s Taobao roll out ‘refund only’ policy to shoppers, heating up rivalry with budget retailer Pinduoduo (SCMP)
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