Global Market Quick Take: Asia – February 13, 2024

Equities: US futures pointed lower in the Asian morning after NASDAQ 100 slipped on Monday from a record high ahead of US CPI release due today. The S&P 500 also slipped modestly, but remained above the 5,000-mark. Energy stocks were in focus as Diamondback Energy rose more than 9% after buying private natural resource company Endeavor Energy, and earnings focus shifts to Coca-Cola and Shopify today. Our Q4 2023 earnings scorecard highlights the winners and losers. Bitcoin hit 50k for the first time in two years, pushing crypto-stocks such as Coinbase and MicroStrategy to register strong gains. Arm shares also jumped another 29% yesterday, and spotlight will once again be on Softbank as Japan markets open after the Monday holiday today. China markets remain closed this week for Lunar New Year.

Fixed income: Choppy trading seen in Treasuries amid lack of key data and Fedspeak at the start of new week, and yields were almost unchanged to close the day. Our Head of Fixed Income Strategy, Althea Spinozzi, discusses the demand at last week’s ultra-long bond auctions in this article. Focus today will be on the US CPI release. If data confirms disinflationary trends, it’s likely that 10-year yields will drop to 4% and will continue to trade rangebound.

FX: Mixed day for the US dollar as market awaited the US CPI release, while EURUSD failed yet again at the 1.08 handle. 100DMA continues to cap and German ZEW may be key ahead of the US inflation release today. USDJPY sees 148.80 resistance now turn into support, and pair is back above 149.30 into Asian morning today. We see the yen weakness sending a warning signal on how much tightening expectations are priced in for the BOJ, and a risk of disappointment later. NZD eased after strong gains on Friday, but stays above 0.61 handle while AUDNZD is back above 1.0650. NZDJPY supported at 91.50 as EURJPY continues to attempt a break above 161 and these pairs will be in focus today with US CPI on the radar. USDCHF moved to 2-month highs at 0.8773 yesterday and softer-than-expected Swiss CPI today could bring risks of FX selling by SNB, weaking the franc further.

Commodities: Crude oil prices were mixed at the start of the week after strong gains last week on escalating Mideast tensions, and OPEC monthly report will be in focus today. Metals however gained with China on holiday but supply disruptions being in focus. Iron ore prices edged higher as train drivers in BHP’s Pilbara iron ore operations have voted to strike later this week for better working conditions and pay in an enterprise agreement. Gold prices slipped and US CPI release today will be key.

Macro: The NY Fed's survey of consumer inflation expectations saw the one-year- and five-year-ahead gauges unchanged at 3.0% and 2.5% respectively, whilst the three-year-ahead expectations saw a decline to 2.4% from 2.6% previously. Focus turns to CPI today where headline inflation is expected to slip below the 3.0% YoY mark and come in at 2.9% YoY from 3.4% in December. Core CPI is expected to ease to 3.7% from 3.9% previously, and will likely be the market focus. There is risk of an upside surprise, and that could nudge the yields higher and bring further gains in USD. May rate cut probability is currently around 70%, and there appears room to push that further to June with markets remaining sensitive to hawkish surprises for now.

Macro events: OPEC MOMR, UK Unemployment/Wages (Dec), Swiss CPI (Jan), EZ /German ZEW (Feb), US CPI (Jan), US NFIB (Jan)

Earnings: Japan Tobacco, Marriott, Airbnb, AIG, Coca-Cola, Shopify, Zoetis, Moody’s Ecolab

In the news:

• Six Years After Volmageddon, Volatility Fears Resurface in US Stocks (Bloomberg)
• Hunt for ‘next Nvidia’ draws options traders to Arm’s soaring stock (Reuters)
• Diamondback sets $26 billion deal for shale oil rival Endeavor Energy (Reuters)
• US Shale Production Growth Seen Sputtering After Last Year’s Boom (Bloomberg)
• German commercial property prices post biggest-ever drop, data shows (Reuters)

For all macro, earnings, and dividend events check Saxo’s calendar.

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