Global Market Quick Take: Asia – April 3, 2024 Global Market Quick Take: Asia – April 3, 2024 Global Market Quick Take: Asia – April 3, 2024

Global Market Quick Take: Asia – April 3, 2024

Macro 6 minutes to read
APAC Research

Summary:  US equities saw a sharp decline as uncertainty over the Federal Reserve’s plans to cut interest rates lingered. Tesla’s disappointing Q1 delivery numbers and higher yields prompted declines in tech stocks. US and China economic data continued to show strength, boosting commodity prices as supply risks also lingered. Oil prices rose 2%, boosting energy stocks. OPEC+ meeting in focus today as geopolitical risks flare up, and Fed Chair Powell’s speech is also on the radar.


The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events. 

Equities: In the U.S., Investors' risk appetite wanes amid increased expectations of ‘higher-for-longer’ in the Fed’s interest rate path. The S&P 500 shed 0.7% and the Nasdaq 100 declined 0.9%. Healthcare was the worst-performing sector with the S&P 500, driven by sharp falls in Humana, CVS Health, and United Healthcare after the Biden administration announced lower-than-anticipated 2025 Medicare Advantage rates. Consumer discretionary was also among the weakest sectors, dragged by a 4.9% decline in Tesla, which tumbled after releasing data showing a delivery of 386,783 EVs in Q1, substantially below the 457,000 forecasted by analysts, and the 423,000 a year ago quarter. Energy stocks bucked the market decline, with Exxon Mobil, EOG Resources, Philips 66, Marathon Petroleum, and Valero Energy advancing around 2%-4% as crude oil prices surged.

In Japan, the Nikkei 225 managed to tic up 0.1% to stabilize at 39,839, as gains in export names such as electronic appliances makers benefitted from yen weakness offsetting profit-taking selling pressure typical at the beginning of the fiscal year.

In China, the CSI300 pulled back by 0.4% after a 1.7% surge the previous day while Hong Kong’s Hang Seng Index jumped by 2.4%, reflecting improved sentiments after the release of stronger manufacturing PMI data from the mainland. Notably, BOC Hong Kong and Trip.com led the performance of the Hong Kong benchmark, each rising over 9%. Xiaomi also saw a significant 9% increase, driven by strong pre-orders for its newly launched SU7 electric car models. Additionally, oil companies and gold mining stocks surged as crude oil reached 5-month highs and gold hit new highs. Share prices of Macao casino operators advanced 3%-6% following the release of a remarkable 53.1% Y/Y growth in gaming revenue, totalling MOP19.5 billion. This figure represents approximately 75% of the revenue level during the same period in 2019.

FX: The dollar failed to hold onto the 105 handle despite more evidence of US economic strength suggesting markets may have peaked in pricing in a less dovish Fed outcome than what data and communication suggests. Fed Chair Powell speaks today at 16:10 GMT. CHF was the underperformer in G10, with EURCHF heading higher again to re-test the 0.98 handle. Japanese yen also remained in focus with intervention threat lingering into the NFP release on Friday, As USDJPY still trades above 151.50 after touching highs of 151.80. EURUSD was relieved with German CPI only mildly below expectations and rushed higher to 1.0770 on dollar weakness later, while GBPUSD rose to 1.2580. Yuan also saw some gains due to the weaker dollar overnight, but USDCNH still trades above 7.25 and PBoC fixing will remain in focus.

Commodities: Sentiment in commodities is being boosted by strength in US and China economic data as supply side issues also continue to linger. Crude oil prices rose 2% as Iran vowed revenge on Israel for an airstrike on its embassy in Syria, which raises risks to oil supplies. OPEC+ meeting today in focus and supply cuts are likely to be maintained. Copper and iron ore also rallied, Gold touched highs of $2,290 while Silver was up 4% to hit a new two-year high as both Gold and Copper edged higher.

Fixed income: Yields surged for the second day in a row from the intermediate to the long end of the curve. Investors are adjusting to the heightened ‘higher for longer’ expectations after recent economic data pointing to a robust US economy, including the latest JOLTS job openings data on Tuesday. Fed’s Daly and Mester joined the chorus of ‘no urgency’ to cut rates. The 10-year yield rose to as high as 4.40% at one point before settling at 4.35%, 4bps higher from its previous close. The short end outperformed the rest of the yield curve, with the 2-year yield falling 2bps to 4.69%.

Macro:

  • US JOLTS job openings for February came in line with expectations at 8.756 mn (exp. 8.75 mn), although January’s was revised lower to 8.748 mn from 8.863 mn, with the quits rate unchanged at 2.2%. Data continues to suggest that the US labor market remains strong and justifies the cautious stance of Fed members towards rate cuts.
  • Fed’s Daly and Mester, both voters this year, stuck to a baseline view of three rate cuts this year but caveated by saying that there is no urgency and they want to see more data before easing. Mester also said the May 1st meeting is too soon for a rate cut but later said she would not rule out a June cut. Daly said that there is a real risk of cutting rates too soon.
  • German inflation cooled more than expected in March to 2.3% YoY, down from 2.7% in the prior month.

Macro events: OPEC+ JMMC Meeting, EZ Flash CPI (Mar), US S&P Services and Composite Final PMI (Mar), US ISM Services PMI (Mar), US ADP National Employment (Mar), Caixin China Services PMI. Speakers: Fed’s Bowman, Goolsbee, Powell, Barr, Kugler

Earnings: No major releases

In the news:

  • Tesla’s Quarterly Deliveries Fall for First Time Since 2020 (WSJ)
  • Call between Xi Jinping and Joe Biden conveys stability, deep disconnect in US-China ties: analysts (SCMP)
  • UK's Cameron calls for increased NATO spending amid Ukraine conflict (Reuters)
  • Amazon to Remove ‘Just Walk Out’ Checkout Technology at U.S. Grocery Stores (WSJ)
  • U.S., Japan to agree on subsidy rules on chips, batteries with China in mind (Nikkei Asia)
  • India manufacturing PMI surges to 16-year high ahead of elections (Nikkei Asia)
  • Toyota reports 20% jump in first-quarter US auto sales (Reuters)

 

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

For a global look at markets – go to Inspiration

Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.