Global Market Quick Take: Asia – January 22, 2024 Global Market Quick Take: Asia – January 22, 2024 Global Market Quick Take: Asia – January 22, 2024

Global Market Quick Take: Asia – January 22, 2024

Macro 5 minutes to read
APAC Strategy Team

Summary:  The S&P 500 surged to a fresh record high with tech stocks being the key driver, as UoM survey pointed to soft landing with strong sentiment and easing inflation expectations, and these hopes could be bolstered this week as we get US GDP and PCE. On the earnings front, focus shifts to Netflix and Tesla. China pessimism on watch as loan prime rate announcement is due today, and focus will shift to Bank of Japan tomorrow. Dollar ended the week higher.


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

US Equities: The tech-heavy Nasdaq 100 surged 2%, reaching a record high at 17,314 on Friday. The broader market benchmark, S&P500 Index gained 1.2% to 4,840, marking a new all-time high closing level. Semiconductor stocks led, with the PHLX Semiconductor Index surging 4%, led by strong gains in AMD, Broadcom, Rambus, Lam Research, Qualcomm, and Nvidia, among others, all rising over 4%. The upbeat outlook from TSMC, the Taiwan-based global chip manufacturing giant reported last week propelled the sentiment of the semiconductor space. This week, Johnson & Johnson and Procter & Gamble are releasing results before the market opens, followed by Netflix after the close on Tuesday. Tesla and Lam Research are reporting on Wednesday and Intel is announcing results on Thursday. A surge in ahead of upcoming mega-cap earnings in the coming weeks and persistent anticipation of a March rate cut by the Fed is likely to underpin the renewed strength of the U.S. equity market in the near term.

Fixed income:  The Treasury yield curve twisted on Friday, with the 2-year yield rising 3bps while the 10-year yield declined 2bps from the previous day amid the strongest University of Michigan consumer sentiment reading since July 2021 partly due to falling short-term and long-term inflation expectations. Over the week, the 2-year yields went up by 24bps while the 10-year yield rose by 18bps in the midst of strong data and hawkish Fedspeak, particularly Governor Waller who stressed that rate cuts would be gradual and executed “methodically and carefully” and played down the risk of potential stress in the repo markets. Fed officials are in blackout this week ahead of the January 30-31 FOMC meeting. On economic data, the focus will be on the GDP first estimate on Thursday and the PCE deflator on Friday.

China/HK Equities: Negative sentiment dominated the Hong Kong and mainland China stock markets. The Heng Seng Index fell 0.5% to end the week 5.9% lower at 15,309 while the CSI300 Index registered a 0.2% daily loss or a 0.4% weekly loss. The Hong Kong stock market benchmark plunged 10.2% in the first three weeks of the year while the CSI300 dropped by 4.7% during the same period. Historical low valuations bring little buying interest as the economic recovery in China fails to gather momentum and businesses are lacking confidence.  Foreign investor selling and index derivative products hedging added to the woes.  Meanwhile, Reuters reported on Friday that China ordered some highly indebted local governments to halt infrastructure projects. During the week, Premier Li Qiang ruled out “massive stimulus” for “short-term growth while accumulating long-term risks”. Investors who are hoping for policy stimuli, will very likely, in our opinion, continue to be disappointed and the market is still in the process of finding a bottom. 

FX:The DXY index, reflecting the dollar moves, pushed lower on Friday as S&P 500 moved to a new record high, but was higher for the week. Support at 103 will be on watch as this week could bring focus back on soft landing hopes with US GDP likely to remain strong while core PCE is expected to soften, while Fed speakers enter a quiet period ahead of Jan 31 meeting. EURUSD still remained short of a move above 1.09 after turning higher from 200DMA last week. USDJPY still above 148 with eyes turning to BOJ meeting on Tuesday. CAD and NOK outperformed, with AUDUSD still attempting a break above 0.66 while NZD underperformed. China’s loan prime rate decision due today, and USDCNH could target a move below 7.20 with rates expected to be left unchanged.

Commodities: Crude oil continued to struggle to find a direction last week as Mideast risks persisted and macro volatility also underpinned with Fed speakers trying to pushback on market’s rate cut expectations. Meanwhile, IEA said that oil markets could remain well-supplied in 2024. Natural gas slumped as traders looked forward to the end of winter while storage remained abundant. Metals rose as dollar softened, with copper also finding support from supply side issues.

Macro:

  • US preliminary UoM consumer sentiment survey for January saw the headline jump to 78.8, well above the expected 70.0 and the prior 69.7. Both current conditions and forward-looking expectations rose to 83.3 (prev. 73.3) and 75.9 (prev. 67.4), respectively. On the inflation footing, 1yr ahead expectations fell to 2.9% from 3.1%, the lowest since December 2020, while the longer-term 5-10yr gauge dipped to 2.8% from 2.9%.
  • Fed speakers continued to push forward rate cut expectations. Mary Daly (voter) said it is premature to think rate cuts are around the corner and it is far too early to declare victory. Goolsbee (non-voter) said he doesn't like "tying his hands" when asked about when to expect rate cuts, but he did clarify we still have "weeks" of data.

Macro events: China PBoC LPR (Jan), US Leading Index (Dec)

Earnings: Brown & Brown, Equity Lifestyle, United Airlines, Zions Bancorp

In the news:

  • China orders indebted local governments to halt some infrastructure projects - sources (Reuters)
  • China defies sanctions to make Russia its biggest oil supplier in 2023 (Reuters)
  • US FDA finds new manufacturing lapses at Eli Lilly plant (Reuters)
  • Chinese yuan gives US dollar a run for its money as African trade embraces other currencies (SCMP)
  • Zuckerberg's Meta Is Spending Billions to Buy 350000 Nvidia H100 GPUs (PCMag)
  • Ron DeSantis drops out of 2024 presidential race, endorses Donald Trump (CNBC)
  • Israel’s Netanyahu Rejects Hamas’s Terms for Hostage Release (Bloomberg)

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.