Global Market Quick Take: Asia – December 27, 2023

US Equities: On Tuesday, the S&P500 gained 0.4% to 4,775, just a touch below its record high in January 2022. The Nasdaq 100 rose 0.6% to 16,878. Intel gained 5.2% after the chip maker confirmed that it had obtained $3.2 billion incentives from the Israeli Government to invest a total of $25 billion in the country. Manchester United rose 3.4% as Jim Ratcliffe agreed to pay $33 a share for a 25% stake in the British football club.

Fixed income: Treasury yields were little changed on Tuesday. The 2-year yield rose 3bps to 4.35% while the 10-year yield was flat, settling at 3.9%.

China/HK Equities: Last Friday, before the long holiday weekend, the Hang Seng Index plunged 1.7%, and the Hang Seng Tech Index slumped 4.4%, dragged down by online gaming stocks, including NetEase, which was down 24.6%, Tencent, down 12.4%, Bilibili, down 9.7%, and Kuaishou, down 7.2%. China’s National Press and Publication Administration published a draft bill that tightens regulations over online gaming, including limiting in-game spending and rewards to gamers' engagement. In light of the dramatic response, the regulator said on Saturday, Dec 23, that it had noticed the concerns and would revise the draft bill after listening to feedback. On Dec 25, the regulators approved 105 new domestic games. Tencent ADR rebounded more than 7% from Friday’s Hong Kong closing level. Over the first two days of the week following Hong Kong's closure, the mainland’s CSI300 edged down 0.4%. The Hong Kong equity market resumes trading today. The unexpected tightening over gaming reminds the market that there are other policy priorities in addition to boosting economic growth and investor confidence.

FX: In thin trading during a holiday season, the currency market was quiet. BoJ Governor Ueda did not offer anything new in his speech on Dec 25. The summary of opinion of BoJ’s December meeting, released this morning, was somewhat dovish, showing no sense of urgency to end the ultra-loose policies. USDJPY rebounded moderately on the summary of opinion to 142.60. For the remainder of the year, USDJPY is likely to hover within the 142-145 range.

Commodities: Crude oil rallied, with WTI crude gaining 2.7%, reaching $75.6, and Brent crude adding 2.5% to $81.1. The disruption to tankers transiting through the Red Sea continued to cause traders' concerns.

Macro:

• US Chicago Fed National Activity Index improved to 0.03 in November from -0.49 in October.
• In its summary of opinion released this morning, a member of the Bank of Japan said that “given the wage growth rate has not caught up with inflation rate to date, even if next spring’s wage hikes are considerably higher than expected, the risk that this will cause underlying inflation to significantly exceed 2 percent is small”.  The member went on to say that “ the Bank is currently not in a situation where it would fall behind the curve if it did not rush to raise policy interest rates. It would not be too late even if the Bank makes a decision after it sees developments in labor-management wage negotiations next spring.” The opinion highlights that the likely timing of the end of ultra-loose monetary policy will be later than what the market is anticipating. 

Macro events:  Japan Housing Starts (Nov), China Industrial Profits (Nov)

In the news:

• Apple files appeal after Biden administration allows US ban on watch imports (Reuters)
• Japan to crack down on Apple and Google app store monopolies (Nikkei)

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

For a global look at markets – go to Inspiration.