Global Market Quick Take: Asia – December 5, 2023

US Equities: US major equity indices generally closed lower on Monday after last week’s peak rate narrative pushed them higher. Markets reconsidered whether aggressive rate cuts priced in for next year could be possible, and odds of a Q1 rate cuts slipped from 75% to 67%. Big tech was hit by the rise in Treasury yields, with Alphabet down close to 2% and Apple down about 1%. Meta fell more than 1% after CEO Mark Zuckerberg sold 680,000 of his shares in the company in November, according to a US Securities and Exchange Commission filing. Spotify’s layoff announcement saw it rose more than 7%, while Uber gained over 2% on reports that it will join the S&P 500 effective Dec 18. Crypto stocks such as Coinbase, Microstrategy and Riot Platforms rose 5-9% with Bitcoin crossing 40k for the first time this year.

Fixed income: Treasuries bear-flattened on Monday as markets were in consolidation after the rip higher seen following Powell’s comments and ISM manufacturing miss on Friday. 2yr yields ended about 10bps lower while 10yr yields slipped about 6bps. With Fed in a blackout ahead of its next decision, today’s JOLTS job openings and ISM services could be key.

China/HK Equities: China and Hong Kong stocks extended losses. Pharmaceutical stocks sold off, dragged down by Wuxi Biologics which was suspended from trading after plummeting 24% on warnings about the outlook. Online gaming and beverage stocks were also weak. EV stocks fell as the November shipment data showed flattish growth month-on-month. Changes in EV shipments were +0.1% to 301.4k at BYD, +1.5% to 41.0k at Li Auto, +0.2% to 20.0k at Xpeng, and -0.7% to 16.0k at NIO. Except for Li Auto, leading Chinese EV producers are still behind their full-year shipment targets. Focus today on Caixin services PMI.

FX: Dollar firmed up to start the week as Treasury yields rose and markets re-considered whether the extent of rate cuts priced in for next year could be possible. NOK underperformed amid lower oil prices, while AUD also retreated from 0.6680+ levels back to 0.66 handle ahead of RBA decision today. USDJPY rose back above 147 but EURJPY was steady around 159.50 as EURUSD pushed lower to test the 1.08 handle with little reaction to Lagarde’s speech. EUR bearish case is likely to build up here as noted in yesterday’s FX note.

Commodities: Broad selling seen in commodities yesterday amid a risk-off tone and dollar strength. Crude oil was down for a third consecutive day as Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ oil production cuts can absolutely continue past the first quarter if needed. Gold touched all-time highs of $2,135/oz before reversing back to $2,020 as yields and dollar rebounded. Copper also closed back below 200DMA a $3.84 and next key support seen at $3.80.

Macro:

• US factory orders fell more than expected in October, dropping 3.6%, flipping from a downwardly revised 2.3% gain in September.
• Japan’s Tokyo CPI cooled considerably with the headline out at 2.6% YoY vs. prev. 3.2% YoY and expected 3.0%. Core CPI slowed to 2.3% YoY from 2.7% previously but core-core measures, although cooled to 3.6% from 3.8%, but remained well above the BOJ’s 2% target.

Macro events: RBA Policy Announcement; Chinese Caixin Services PMI (Nov), EZ/UK/US Composite/Services Final PMI (Nov), EZ Producer Prices (Oct), US ISM Services PMI (Nov), US JOLTS Job Openings

In the news:

• Spotify to cut 1,500 jobs in third layoff round this year, shares jump (Reuters)
• Bitcoin Surges Past $42,000 Even as Stocks and Bonds Take a Hit (Bloomberg)
• COP28 Latest: Kerry Tells Big Emitters They Can No Longer Hide (Bloomberg)
• US funding for Ukraine set to run out by end of the year, White House warns (FT)

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