Global Market Quick Take: Asia – February 6, 2024 Global Market Quick Take: Asia – February 6, 2024 Global Market Quick Take: Asia – February 6, 2024

Global Market Quick Take: Asia – February 6, 2024

Macro 6 minutes to read
APAC Strategy Team

Summary:  Hawkish macro narrative got a further push with hot US ISM services PMI and Fedspeak, but Nvidia rose to a record high. Broader equities, however, were hurt by the relentless rise in yields. Earnings focus today on Eli Lilly, which is turning out to be a key competitor for Novo Nordisk in the obesity drugs space. China markets remained under pressure despite authorities trying to put a floor. US dollar rose to fresh near 3-month highs, and AUD in focus today as RBA decision is on the radar.

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

US Equities: A sharp two consecutive day rise in Treasury yields weighed negatively on stocks, seeing the S&P 500 Index and the Nasdaq 100 Index pulling back by 0.2% and 0.3% respectively. Meanwhile, Nvidia rose to a record high of $693 following a bullish report from an analyst at a leading US investment bank. ON Semiconductor surged 9.5% after reporting earnings beating estimates. Estee Lauder jumped 12.2% on a layoff plan to cut costs. In extended trading, Palantir Technologies surged nearly 20% on an upbeat full-year revenue and earnings guidance and management remarks that commercial demand for large-language models “continues to be unrelenting.” For a preview of Eli Lilly’s Q4 results scheduled to be released before the US market opens today, read Peter Garnry’s article here.

Fixed income:  Treasuries sold off following Powell’s CBS 60 Minutes interview and extended losses after a hot ISM Services report showing stronger than expected gains in the headline as well as the employment and prices paid components. The 10-year yield surged 14bps to 4.16% and the 2-year added 11bps to yield 4.47%. On Tuesday, the Treasury is auctioning $52 billion in 3-year notes. In this article, Althea Spinozzi, Head of Fixed Income Strategy of Saxo, details a discussion of the upcoming Treasury supply this week.

China/HK Equities: The Hang Seng Index remained weak, edging down 0.2% on Monday. The CSI 300 Index had a 0.7% gain amid support from government-controlled investment funds which masked the brutal selloff of the vast majority of A shares. Out of the 5,343 A-share stocks, 4,898 declined and the Shanghai Composite Index fell by 1% while the CSI Small Cap 500 Index and the CSI 1000 Index plummeted by 2.3% and 6.2% respectively. Over the weekend, Trump's statement on a Fox News interview, threatening tariffs on China exceeding 60%, further impacted the already weak market sentiments. Additionally, on Monday, the Caixin China Services PMI disappointed, falling to 52.7, below expectations. The CSRC issued several statements during the day and in the evening to pledge the maintenance of market stability and warn against “malicious” short selling.  

FX: The stronger US ISM services print further added fuel to the recent narrative on a pushback to rate cut expectations, adding to the case for a dollar rally. DXY index traded to highs of 104.60, with EURUSD sliding below 1.0750 and ECB’s inflation expectations will be in focus today. Yen weakness was more measured as USDJPY traded above 148.50 where intervention threat could pick up. NZDUSD also was relatively stable, just as we noted in our Weekly FX Chartbook yesterday and slide below 0.6050 found some buyers. AUDUSD however broke below 0.65 and RBA meeting is in focus today. Any pushback to dovish expectations could spark a recovery in AUD, but a broader bearish trend is likely to stay. AUDNZD is on its wat to test the 1.07 handle again after failing at that level last week.

Commodities: Crude oil prices registered modest gains on Monday despite a hawkish macro narrative gripping market, as geopolitical angst continued. Oil, however, remains range-bound amid no supply disruptions seen. Gold prices slid further to break below 50DMA, currently trading at $2,025 with next support at $2,010 in focus. Silver also extended its decline after failing at trendline resistance last week. Industrial metals were the worst performers of the day amid continued downbeat China rhetoric, but our weekly COT report highlights a cut in short Copper positions.


  • US ISM services for January also came in hot, adding fuel to the hawkish fire. Headline PMI rose to 53.4 from 50.5 (vs. 52.0 exp). Prices paid surged to 64.0 (prev. 57.4), the highest since February 2023, and could raise some concern about disinflation trends. Employment lifted back into expansionary territory, printing 50.5 (prev. 43.8), while business activity was unchanged at 55.8. Backlog of new orders and supplier deliveries both rose back above 50.0 to 55.0 (prev. 52.8) and 52.4 (prev. 49.5), respectively.
  • Fed speakers remained balanced although Goolsbee (non-voter) said he wouldn’t rule out a March cut. Bowman (voter) said reducing the policy rate too soon could mean more rate hikes are needed in the future, and she also remains willing to raise the policy rate at a future meeting if it is needed.
  • Japan’s wage data for December came in below expectations. Labor cash earnings rose 1% YoY, above 0.7% previous but missing expectations of 1.4%. Real cash earnings were -1.9% YoY from -2.5% previous vs. -1.5% expected. Focus is still on wage negotiations and market is increasingly expecting BOJ to exit its negative interest rate policy in April, but we see only modest and gradual tightening.
  • Caixin China Services PMI decreased to 52.7 in January from 52.9 in December, contrary to the median forecast of an increase.

Macro events: UK BRC Retail Sales (Jan), Germany Industrial Orders (Dec), ECB Consumer Expectations Survey (Dec), EZ Retail Sales (Dec), RBA Policy Announcement, Fed’s Mester, Harker, Kashkari, Collins

Earnings:  Eli Lilly, Amgen, Gilead, Linde, KKR, UBS, BP, Fiserv, Toyota, Mitsubishi Corp, Nintendo, Intesa Sanpaolo, SMIC, Hua Hong Semiconductor.

In the news:

  • China Tightens Some Trading Restrictions for Domestic and Offshore Investors (Bloomberg)
  • Spate of job cuts continues unabated at Big Tech, media firms (Reuters)
  • Red Sea tensions risk significantly higher inflation, OECD warns (CNBC)
  • BOE’s Pill Says Rate Cut Possible This Year as ‘Reward’ for Inflation Drop (Bloomberg)
  • The World’s Chip Industry Poised to Bounce Back After Tough 2023 (Bloomberg)
  • Novo Nordisk's parent to buy Catalent for $16.5 bln to boost Wegovy supply (Reuters)
  • McDonald’s revenue misses estimates as Middle East conflict weighs on quarterly sales (CNBC)
  • Estee Lauder to cut jobs on skittish China demand; shares surge 19% (Reuters)
  • Palantir stock jumps 19% as AI demand drives revenue beat (CNBC)
  • India's probe of Paytm widens; $2.5 bln wiped off shares in three sessions (Reuters)


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