Global Market Quick Take: Asia – May 9, 2024 Global Market Quick Take: Asia – May 9, 2024 Global Market Quick Take: Asia – May 9, 2024

Global Market Quick Take: Asia – May 9, 2024

Macro 6 minutes to read
Charu Chanana

Head of FX Strategy

Key points:

  • Equities: ARM earnings send shivers to chip stocks, European equities outperform
  • FX: GBP could face downside pressures if Bank of England hints at a June rate cut
  • Commodities: US crude stocks inventories show a surprise drop
  • Fixed income: Weak 10-year auction signals higher yield demand for duration
  • Economic data: Bank of England, US jobless claims, China trade

------------------------------------------------------------------ 

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

Equities: After a dull overnight session where US equity indices struggled to find a direction, US index futures pointed slightly lower. Macro and earnings catalysts are starting to thin out, and focus remains on Fed speakers. Uber fell more than 5% as it posted a surprise quarterly loss. Reddit, however, gained 4% on earnings upside. After-hours, chip designer ARM fell nearly 10% as its annual revenue guidance largely disappointed investors. ARM’s report is sending ripple effects to other chipmaker stocks such as Nvidia and AMD as well in the post-market session.

Meanwhile, European equities extended their recent gains, with EuroStoxx 600 and UK’s FTSE 100 again reaching fresh highs. Japan’s Nikkei 225 opened in green, but chip stock shivers and BOJ’s tightening hints could cap gains. China and HK stocks are also in correction after the recent run higher, and China’s trade data will be on watch today.

FX: Some more strengthening seen in the US dollar as equity momentum faded and Fed speakers maintained their narrative on inflation concerns. JPY was back on the radar as it weakened again, partially erasing the intervention-driven gains from last week. USDJPY is now back above 155.55 and verbal jawboning from authorities continued. Worth noting that comments from BOJ have started to tilt towards hinting at the next rate hike, and BOJ summary of opinions released this morning also talked about deepening talks on rate hike timing. USDSEK rose on Sweden’s interest rate cut, and GBPUSD will be in focus today after it slipped below 1.25. Watch for a dovish tilt in BOE’s vote split, that could prompt the markets to take up the pricing of a June rate cut, and create downside pressures on GBP. GBPAUD could slip towards 1.89 and EURGBP could rise to 0.8650 in such a scenario. AUDUSD has slipped below 0.66 on dollar strength and AUDNZD is back below 1.0960.

Commodities: Crude oil prices rose as US inventories signalled a tight physical market with crude stockpiles declining by 1.36 million barrels last week. Moreover, The Biden administration raised the price it is willing to pay to refill the country’s depleted strategic oil reserve. The Energy Department said it will pay as much as $79.99/bbl, up from an informal cap of $79/bbl. Read this article to get our latest views on crude. Hawkish Fed comments and stronger dollar continued to weigh on metals, while grains also retreated after recent gains on weather-related concerns.

Fixed income: The demand at the 10-year auction was underwhelming, suggesting that investors are demanding a higher yield to hold duration. Gilts in focus today as BOE decision is due and risk of a dovish tilt in vote split remains. JGB yields also key with BOJ hinting at a possible June rate hike.

Macro:

  • Fed’s Collins (2025 voter) acknowledged there are risks to cutting too soon and that rates will have to be held at a two-decade high for longer than previously thought. But she is optimistic the Fed can get to 2% inflation in a reasonable time frame. She also said that she expects some factors underpinning economic resilience to wane.
  • Sweden’s Riksbank kicked off the easing cycle with a rate cut yesterday to 3.75% as expected. This is the first Swedish rate cut since 2016. The policy statement said “inflation is approaching the target while economic activity is weak”. The bank also says policy rate expected to be cut 2 more times in H2.
  • Japan’s wage growth data for March showed a tepid growth of 0.6% in labor cash earnings vs. 1.4% previously. However, adjusted measure that excludes sample changes rose 2.2% YoY from 1.9% last month.
  • Bank of England Preview: Markets are expecting a dovish hold by the MPC, but a June rate cut is not yet priced in by markets. A 7-2 vote split is in the cards, and that could potentially set the stage for a rate cut in June. To read more on what this means for Gilts and Sterling, go to this article.

Macro events: BoE Announcement & May MPR, US jobless claims, China Trade Balance (Apr). Speakers: BoE’s Bailey, Pill; ECB’s Cipollone; ECB’s de Guindos; Fed's Daly.

Earnings: Enel, SoftBank, Brookfield, 3i Group

News:

  • Airbnb forecasts weaker Q2 revenue despite robust demand for international travel (Reuters)
  • Arm's annual revenue forecast fails to impress investors; shares tumble (Reuters)
  • Robinhood's crypto business drives massive earnings beat (Reuters)
  • Hawkish Singapore Policy, Cooling Inflation a Tailwind for Bonds (Bloomberg)
  • Biden Raises Oil Price US Is Willing to Pay to Refill Reserves (Bloomberg)
  • Beyond Meat reports wider-than-expected Q1 loss, sales decline (Reuters)
  • Uber shares tumble as weaker ride-share demand hurts Q2 forecast (Reuters)

 

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.