Macro: Sandcastle economics
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Summary: The S&P 500 and Nasdaq 100 reached new highs fueled by a surge in semiconductor stocks, particularly AMD, which rose 9.1%. Dell and Autodesk surged in after-hours trading, with gains of over 17% and 9%, respectively, following robust quarterly results. January's US PCE data showed no hawkish surprises, aligning with expectations. Core PCE growth eased to 2.8% Y/Y, and the headline growth slowed to 2.4%. Gold reached a three-week high, while BOJ's Takata's comments caused volatility in the Japanese yen, leading USDJPY to dip to 149.20 before recovering to 150. Crude oil prices remained uncertain, with the upcoming OPEC meeting looming next week.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
US Equities: Stocks advanced higher, with both the Nasdaq 100, climbing 1% to 18,044, and the S&P 500, adding 0.5% to 5,096, making new record highs. Semiconductor stocks were among the top performers. AMD soared 9.1% while Marvell Technologies, ARM, Intel, and Nvidia gained 6.1%, 5.4%, 2.5% and 1.9% respectively.
In the extended hours, Dell jumped more than 17% after beating revenue and earnings estimates amid increases in demand for its AI servers and announcing an increase in dividend by 20%. Autodesk surged more than 9% the 3-D design software developer reported stronger-than-expected sales and earnings and guided a stronger full-year outlook.
Hong Kong/China Equities: The mainland CSI300 rallied 1.9% to recover all its loss the day before, driven by advances in semiconductors, AI concepts, and computing stocks. In Hong Kong, stocks traded mixed with the Hang Seng Index slid 0.2%. Xinyi Solar soared 24.3% after an earnings beat, an optimistic outlook, and a dividend increase. SMIC surged 5.9% amid the strong share performance of semiconductor stocks on mainland bourses. Contrary to that, Budweiser Brewing plunged 6.6% after reporting earnings missing forecasts and Baidu declined 6.6% as well on a downbeat outlook.
After the close of the Hong Kong market, NetEase reported year-on-year revenue growth of 7% and earnings growth of 54% but both missed analysts’ forecasts due to increased competition from games launched by Tencent and others. NetEase raised its dividend payout ratio to 76% from its historical norm of around 30%. ADS shed 3.9%, equivalent to 4.1% below the Hong Kong closing level on Thursday.
Today’s focus will be on China’s official NBS PMIs and the private Caixin China manufacturing PMI. Economists surveyed by Bloomberg are expecting the NBS manufacturing PMI to stay in the contractionary territory and slow to 49.0. After the Hong Kong market closes, NIO will report quarterly results.
Fixed income: Treasuries remained range-bound, with the 10-year yield edging down 1bp to 4.25 and the 2-year yield off 2bps to 4.62 as the PCE data released on Thursday was in line with economists’ projections.
FX: The dollar was choppy on US PCE release but has not threatened any key levels. Comments from BOJ’s Takata, as noted below, stirred up some volatility in the Japanese yen. USDJPY saw lows at 149.20 before recovering to 150 with traders now looking for a BOJ move in April, if not March. AUDUSD also held up near the 0.65 mark, while all other G10 currencies were in red even as NZDUSD held up just below the 0.61 level as Governor Orr said that rate cuts will not come soon. Swiss Franc led the decline, with USDCHF rising above 200DMA and threatening 0.8850. EURUSD failed to push above 1.0850 again, with regional inflation prints coming in mixed. Pair is now back at 1.08 handle, and Euro-area CPI will be on the radar today.
Commodities: Crude oil prices continued to struggle to find a direction with OPEC meeting on the radar next week. Gold rose to a three-week high after US PCE data came in-line with expectations, keeping the rate cut expectation for later in the year alive. Base metals edged higher on the LME with demand outlook brightened by the prospects of strong demand for metals in India after a strong GDP growth of over 8% was reported. Focus is also turning to China’s “two sessions” meetings next week where growth target and policy agenda will be laid out.
Macro:
Macro events: China NBS PMIs (Feb), EZ CPI (Feb), US ISM Manufacturing PMI (Feb)
Earnings: NIO, China Tower, Riverstone, Canadian Natural Resources, Kuehne + Nagel
In the news:
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