Global Market Quick Take: Asia – January 25, 2024 Global Market Quick Take: Asia – January 25, 2024 Global Market Quick Take: Asia – January 25, 2024

Global Market Quick Take: Asia – January 25, 2024

Macro 5 minutes to read
APAC Research

Summary:  The Hang Seng Index surged by 3.6%, and the CSI300 Index rose by 1.4% following the People's Bank of China's 50bp cut in the reserve requirement ratio (RRR). The Nasdaq 100 reached a record high of 17,499, gaining 0.6%. Notably, Netflix saw a 10.7% surge after surpassing earnings and subscriber addition estimates. ASML reported strong Q4 results with €9.2 billion in bookings, exceeding expectations, signaling a positive outlook for the semiconductor industry. Tesla, however, reported Q4 revenue and adjusted EPS slightly below projections, causing a nearly 5% drop in share prices during extended hours. The Bank of Canada's unexpected dovish stance resulted in the Canadian Dollar underperforming, with USDCAD rising sharply to 1.3520. China's RRR cut positively impacted commodities, particularly metals, with copper and iron ore rising close to 2.5%.

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

US Equities: The Nasdaq 100 added 0.6% to 17,499, reaching another record closing high, driven by Nvidia’s 2.5% and Meta’s 1.4% gains. Netflix surged 10.7% after earnings and subscriber additions beat estimates. ASML reported Q4 results, showing a strong order intake with bookings at €9.2bn, compared to the anticipated €3.6bn. The CEO mentioned that the overall semiconductor industry has bottomed and is entering the rebound phase. The ADR of ASML gained 8.9%. See Peter Garnry’s article on Netflix and ASML here.

The S&P500, a broader benchmark, underperformed the tech-heavy Nasdaq, ticking up 0.1% to 4,869, while the Dow Jones Industrial Index slid 0.3%. After the closing bell, Tesla reported Q4 revenue of $25.2 billion and adjusted EPS of $0.71, both around 3% below analysts’ projections. The company warned in a letter to shareholders that vehicle volume growth in 2024 “may be notably lower than the growth rate achieved in 2023”. Tesla shares dropped by nearly 5% in the extended hours.

Fixed income: The 10-year Treasury yield rose by 5bps to its highest level in 2024, reaching 4.18%, following the unexpected bounce of the S&P Global US Manufacturing PMI to 50.3, indicating an expansion in activities. Soft demand in a $61 billion auction of 5-year Treasury notes kept Treasuries on the defensive and led to a finish at their day highs in yields or lows in prices. The 2-year yield rose 1bp to 4.38%.

China/HK Equities:The Hang Seng Index extended its rally by 3.6%, and the CSI300 Index added 1.4% following the People’s Bank of China cut the reserve requirement ratio by 50bps. The PBoC’s mentioning of supporting developer cash flows triggered a strong rally in the share prices of Chinese developers. The news from the previous day about founders Jack Ma and Joseph Tsia increasing holdings continued to draw buying to Alibaba, propelling it 7.3% higher. The Chinese regulators’ removal of a controversial draft bill on online games the day before continued to support Tencent and NetEase. Other China internet stocks as well as central state-owned enterprises were other notable outperformers. While the RRR cut triggered an impressive rally, markets will struggle to go higher as investors have their focus back to the economic fundamental and uncertainties ahead of crucial political meetings in the coming two months.

FX:The dollar pushed lower earlier on Wednesday, with the DXY index breaking below 103, as yen gained on higher JGB bond yields and yuan recovered with PBOC expanding its measures to support the economy. However, dollar recovered later with US PMIs indicating sustained economic resilience and Bank of Canada’s dovish surprise which led to CAD being the underperformer for the day. USDCAD rose sharply to 1.3520 and immediate resistance seen at 1.3540 ahead of the fibo retracement at 1.3623. USDJPY slid below 147 to lows of 146.66 but moving back above 147.50 this morning in Asia as US yields jumped higher. EURUSD made an attempt to break above 1.09 again but was short-lived with ECB ahead today and even GBPUSD gains to 1.2775 following the strong PMIs seen to be reversing on dollar recovery. US GDP today will be key and higher-than-expected growth could boost the dollar, weighing on JPY and EUR.

Commodities: China’s RRR cut boosted commodities, especially metals. Copper and iron ore were up close to 2.5% amid supply concerns underpinning the former. Gold edged lower as Treasury yields rose higher after US PMI data, but Silver gained 1% as it bounced off key support. Crude oil was firmer amid a broader recovery in risk appetite with economic and earnings holding up and stimulus announcement from China, while supply concerns due to geopolitical tensions continued and the EIA data showed a chunky fall in crude stockpiles which were down more than 9mn barrels last week. However, the EIA report could have been distorted by the recent cold ‘bomb’ in the US temporarily cut production of oil and gas due to freeze-offs – when low temperatures freeze wells and other equipment, while temporarily driving a spike in demand for fuels, especially diesel and heating oil.


  • The PBoC Governor Pan Gongsheng announced during a scheduled State Council press conference that the central bank cut the reserve requirement ratio (RRR) by 50 bps and reduced the re-lending and re-discounting rates for the rural sector and micro and small businesses by 25bps. While an RRR cut had been widely anticipated, the 50bp cut and the resulting RMB1 trillion liquidity injection were larger than expected and those of the prior four cuts in 2022 and 2023. PBoC officials also mentioned persistently lowering the cost of aggregate social financing and there would be new financing rules to support property developers’ cash flows.
  • UK January PMIs came in better than expected and improving over December, with manufacturing at 47.3 from 46.2 (exp: 46.7) and services at 53.8 from 53.4 (exp: 53.2), suggesting growth in Q1 could stay supported. Eurozone PMIs were however less robust and signaled a broad contraction. Manufacturing PMI was at 46.6 from 44.4 but services eased to 48.4 from 48.8 and could make it difficult today for the ECB to talk about delay in rate cuts. Read our full ECB preview here.
  • US S&P Flash manufacturing PMI for January rose back into expansionary territory, printing a 15-month high of 50.3 (exp. & prev. 47.9). Services PMI remained in expansion territory accelerating to 52.9 from the prior 51.4, also above expectations (51.0), printing a 7-month high.
  • Bank of Canada left its interest rate unchanged at 5.00%, as was widely expected. The main tweak was the removal of the language that it is prepared to raise rates further if needed although Governor Macklem didn’t rule that out. However, he said that the Governing Council's discussion about future policy is shifting from whether monetary policy is restrictive enough, to how long to maintain the current restrictive stance.


    Macro events: ECB, Norges Bank, SARB & CBRT Policy Announcements, US GDP Advance (Q4), Germany IFO (Jan), US Jobless Claims

    Earnings: Union Pacific, T-Mobile US, Visa, LVMH, Intel, Comcast, Blackstone, NextEra Energy, Marsh & McLennan

    In the news:

  • Tesla Flags ‘Notably Lower’ Growth as It Builds Low-Cost Car (Bloomberg)
  • Microsoft hits $3 trillion market value, second to Apple (Reuters)
  • Tech’s ‘Magnificent Seven’ Stocks Are Back on Top (WSJ)
  • Boeing Halted From Further Max Production Increases by FAA (Bloomberg)
  • China Boosts Stimulus by Allowing Banks to Keep Smaller Reserves (Bloomberg)
  • China GDP: provinces set conservative 2024 economic growth targets as debt hangover bites (SCMP)
  • China suffers first net outflow of funds in 5 years in 2023 (Nikkei Asia)
  • ECB asks some lenders to monitor social media for early signs of bank runs (Reuters)
  • SK Hynix posts surprise Q4 profit on AI chip demand (Reuters)


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