Global Market Quick Take: Asia – September 26, 2024

In the news:

• Micron stock jumps as Q1 revenue forecast tops analyst estimates (Yahoo)
• Meta Connect: CEO Touts AI Chatbot Growth, Launches New Headset (IBD)
• HPE Stock Upgraded On AI Server Growth In Data Centers (IBD)
• Talks to resume between striking machinists, Boeing on Friday, says union (Yahoo)
• GM Stock Cut To Sell By Morgan Stanley On China Reversal (IBD)

Macro:

• US new home sales fell 4.7% in August to 716k from 739k, but above the expected 700k, whereby new home supply was 7.8 months' worth (prev. 7.3 months' worth).
• Sweden’s central bank, the Riksbank, maintained a dovish tilt at the September meeting, cutting rates for a third time by another 25bps to 3.25% and guiding for further rate cuts at the two remaining meetings this year to reach 2.75% by year-end. Next up today will be the Swiss National Bank, which is also expected to cut rates, but key will be to watch the language on FX as the central bank may not be too welcoming of the franc strength now that disinflation has returned.

Macro events: SNB Policy Announcement, US Durable Goods (Aug), GDP Final (Q2), PCE Prices Final (Q2), Initial Jobless Claims (w/e 21st Sep)

Earnings: Costco, Accenture and Jabil

Equities: U.S. stocks saw mixed performances on Wednesday as investors evaluated the Federal Reserve's rate cut trajectory. The S&P 500 and the Dow declined by 0.2% and 0.7%, respectively, pulling back from earlier highs, with energy stocks such as Chevron (-2.4%) and Exxon Mobil (-2%) leading the losses. Conversely, tech stocks including Nvidia (+2.2%), Intel (+3.2%), and AMD (+2.3%) provided some support, helping the Nasdaq close flat. Micron surged 13% post market after reporting revenue and earnings that beat estimates and in additon projecting this quarter’s revenues to be between $8.5-$8.9 billion, above the $8.5 billion estimates.  Looking ahead, investors are now focused on upcoming key economic data, including the GDP report tonight and the PCE inflation index on Friday.

Fixed income: Treasuries ended weaker across the curve as the market absorbed a $70 billion 5-year note auction and a surge in corporate bond supply. U.S. yields had decreased by 4 to 5 basis points across the curve, with spreads remaining within a narrow intraday range. The 10-year yields settled around 3.77%, down by 5 basis points for the day. With no major price catalysts, market focus shifted to duration events. The busy corporate issuance schedule was led by Oracle’s four-part offering, with the day’s total expected to exceed the top end of dealers’ forecasts of $25 billion for the week. The $70 billion 5-year note auction was solid, resulting in minimal price movement and stopping on the screws. Additionally, Treasury Secretary Janet Yellen is scheduled to speak at the U.S. Treasury Market Conference at 11:15 AM ET. Federal Reserve Governor Adriana Kugler expressed strong support for the central bank’s recent decision to lower borrowing costs by half a point last week, noting that further rate cuts would be appropriate if inflation continues to ease as anticipated.

Commodities: Oil stabilized after its largest drop in two weeks, as Libya's rival factions agreed on new central bank leadership, potentially allowing some crude production to resume. West Texas Intermediate stayed below $70 a barrel after a 2.6% decline on Wednesday, while Brent crude hovered near $73. Libya's eastern and western administrations "initialed an agreement" on the central bank board, with a signing ceremony scheduled for Thursday, according to the UN. A stronger dollar also pressured commodities priced in the currency, including oil. Spot gold hit a record $2,670.57 an ounce before trimming gains, having surged 29% this year, while silver climbed 34%. Indian gold demand is expected to be strong due to a reduction in import tax and an anticipated robust festival and wedding season. Base metals steadied as investors assessed the impact of a Chinese stimulus package on the world's largest metals consumer.

FX: The US dollar turned back higher due to its safe-haven appeal after significant Middle Eastern escalations and focus will turn back slightly to Fed today as Chair Powell and NY Fed’s Williams take to the wires along with a host of other committee members. Labor market focus also makes it key to watch the weekly US jobless claims print that will be out today. Activity currencies led the losses against the US dollar, with kiwi dollar plunging back below 63 cents and Aussie dollar failing at 69 cents and back below 0.6850. Japanese yen and Swiss franc were also in red despite being safe-havens with the former reaching three-week lows against the US dollar. The offshore Chinese yuan also retreated after trading below the key 7 handle against US dollar for a brief period yesterday.

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

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