Global Market Quick Take: Asia – October 24, 2023

US Equities: In a volatile session marked by significant movements in bond yields, stocks concluded with mixed results. The Nasdaq 100 gained 0.3% to reach 14,605, while the S&P 500 slid 0.2%, extending its 5-day losing streak to 4,217. The Nasdaq 100's advance was propelled by gains in the mega-cap tech giants. Nvidia surged by 3.8% following a news report indicating that the dominant GPU producer would produce CPU chips for PCs using ARM technology. Microsoft and Alphabet are set to report earnings on Tuesday.

Fixed income: US Treasuries had a reversal after the 10-year yield briefly breached 5% in London hours, reaching 5.02%, the highest level since 2007. Subsequently, the yield sharply dropped by 19bps intraday to as low as 4.83% in the New York afternoon. Traders attributed this dramatic movement to comments made by well-known investors. Bill Ackman tweeted that he had covered his shorts in bonds due to "too much risk in the world" and because "the economy is slowing faster than recent data suggests." Similarly, Bill Gross stated that he was buying SOFR interest rate futures, anticipating a recession by the end of the year. The 2-year yield finished at 5.05%, up 3bps, and the 10-year yield fell by 6bps to 4.85%. Today, the Treasury is auctioning $51 billion of 2-year notes. At Saxo, we see value in US Treasuries, particularly in the front end of the curve.

China/HK Equities: The Hong Kong market was closed for a public holiday on Monday. In mainland China, the CSI300 declined by 1% due to persistent weakness in sentiment. Additionally, the Chinese authorities' probe into Foxconn over tax issues and land use also weighed on technology names. In the evening, Central Huijin, a unit of the China sovereign wealth fund, stated that it had purchased stock ETFs on Monday and committed to accumulating more. In response, Chinese ADRs rallied overnight, with the Nasdaq Golden Dragon China Index gaining 0.9%. Central Huijin's actions may help boost sentiment and provide support to the Hong Kong and China markets on Tuesday.

FX: USD was sold-off as 10-year bond yields retreated after touching the 5% mark and safe-haven bid remained in check with Israel holding off on the ground invasion. EURUSD pierced through 1.06 to MTD highs of 1.0678 and PMIs will be on watch today followed by the ECB meeting on Thursday. GBPUSD pushed above 1.22 as well, and AUDUSD also bounced higher from 0.63 handle and AU CPI tomorrow will be key. USDJPY retreated from 150 to lows of 149.56 as Treasury yields eased, before returning slightly higher.

Commodities: Oil prices saw a sharp decline as war premium continued to be erased, although minor gains returned this morning in Asia. Copper touched 11-month lows amid demand weakness concerns with tighter monetary policy effects being seen in forward looking indicators, while supply concerns are also easing. Gold traded sideways around $1975, as safe-haven bid retreated while softer yields offset.

Macro:

• Israel is still holding off on its planned ground assault on Gaza as further diplomatic efforts were made to prevent the conflict from spreading. Bloomberg reports there are growing calls inside Israel for a rethink of the planned ground invasion, due to the uncertainty about the fate of over 200 hostages being held in Gaza, fear of Hezbollah in Lebanon invading Israel from the north, and the risk of heavy Israeli military casualties. Meanwhile, Israel continues with its aerial bombardment of Gaza and with strikes at Hezbollah forces in Lebanon.

Macro events: German GfK Consumer Confidence (Nov), EZ/UK/US Flash PMIs

Earnings: Microsoft, Alphabet, Visa, Coca-cola, Novartis, Hermes

In the news:

• Ackman, Gross Abandon Bearish Bond View With Yields Bouncing Off 5% (Bloomberg)
• Nvidia to make Arm-based PC chips in major new challenge to Intel (Reuters)
• Chevron to buy Hess Corp for $53 billion in all-stock deal (Reuters)
• China Sovereign Wealth Fund Buys ETFs in New Bid to Boost Stocks (Bloomberg)

For all macro, earnings, and dividend events check Saxo’s calendar.

For a global look at markets – go to Inspiration.