Global Market Quick Take: Asia – October 25, 2023 Global Market Quick Take: Asia – October 25, 2023 Global Market Quick Take: Asia – October 25, 2023

Global Market Quick Take: Asia – October 25, 2023

Macro 5 minutes to read
APAC Research

Summary:  US equities halted the recent run lower with strong earnings and guidance from Coca-Cola, 3M and GE while Treasury yields also steadied after Monday’s moves. European PMIs underperformed US, bringing the dollar higher once again but AUD was the outperformer on hawkish comments from RBA Governor Bullock. Microsoft earnings brought AI enthusiasm again while Alphabet disappointed and focus turns to Meta today.


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

US Equities: US stocks ended the day in gains, halting a 5-day drop as earnings such as from Coca-Cola, GE and 3M boosted risk appetite and Treasuries also stabilized after Monday’s moves. Strong US PMIs also eased concerns of an immediate recession, and Q3 GDP data out tomorrow is also expected to be strong. However futures are pointing lower after Microsoft and Alphabet reported earnings after the bell. Microsoft jumped over 3% as AI best boosted the cloud business, but Alphabet shares were down 6% as it missed expectations.

Fixed income: Choppy day for US Treasuries as European and US PMIs underpinned, and the 2 year auction was relatively soft. 2-year ended the day 6bps higher as stronger PMIs put more weight on Fed’s higher-for-longer message, while 10-year was down nearly 3bps.

China/HK Equities: Despite a 0.4% rebound in the CSI300 driven by Central Huijin's purchase of index ETFs, the Hang Seng Index extended its losing streak to four sessions, dropping by 1.1% to close at 16,992, slipping below the 17,000 mark on Tuesday. China's internet stocks displayed weakness, with Alibaba declining by 1.7% and Tencent plummeting by 2.1%. Additionally, China's property sector faced a sharp decline as S&P warned that China's 2024 growth might be limited to 2.9% if the property crisis worsens. However, sentiment was revived for now and futures are pointing higher with stimulus announcements around issuance of more sovereign debt.

FX: The diverging US and European PMIs brought some strength back into the US dollar after Monday’s losses and the USD is now unchanged on the week to date basis. EURUSD plunged back below 1.06 from highs of 1.0694 while EURGBP made a round trip back to 0.87+ as GBPUSD slid back below 1.22 handle. USDJPY still close to the 150 area while AUD outperformed hitting highs of 0.6379 after commentary from RBA's Bullock who said the board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation. That could make AUD extremely sensitive to Australia’s Q3 CPI release today.

Commodities: Crude oil extended losses as geopolitical risks were not seen to be widening amid delays in Israel’s ground invasion of Gaza, and announcements of China stimulus or higher US PMIS not offsetting the decline in war premium as demand outlook remains weak. Copper bounced higher while Gold was relatively stable after being supported at $1955 as safe-haven bid retreated and strong dollar underpinned, but long-end treasury yields declined slightly.

Macro:

  • Preliminary PMIs for September showed European underperformance while US is still holding steady. Eurozone composite PMI slipped back to 46.5 from 47.2 with manufacturing staying weak at 43 while services disappointed, slipping back to 47.8 from 48.7 (48.6 expected). Hope for continued stabilisation in German services disappointed, with a fall to 48.0 in the German Services PMI after briefly eking above 50 last month.
  • US PMIs where slightly stronger than expected, the composite at 51.0 from 50.2. Manufacturing PMI rose back into expansionary territory, albeit only just, to 50.0 (prev. 49.8) against the expected 49.5. Services rose to 50.9 from 50.1, despite consensus for a decline to 49.9.

Macro events: Bank of Canada rate exp 5.0% vs. 5.0% last, Australian CPI (Q3) exp 5.3% YoY vs. 6.0% prior, German Ifo Survey (Oct) exp 86 vs. 85.7 prior

Earnings: Meta, Thermo Fisher Scientific, T-Mobile, IBM, Service Now, Boeing, China Unicom,

In the news:

  • China to issue additional central government bonds to support disaster relief (Xinhua)
  • China's Xi makes first known visit to central bank -sources (Reuters)
  • China Growth May Fall to 2.9% If Property Crisis Widens, S&P Says (Bloo,mberg)
  • China sacks missing defence chief Li Shangfu with no explanation (SCMP)
  • Microsoft sales beat estimates as customers prepare for AI rollout (Reuters)
  • Google-parent Alphabet's cloud division misses revenue estimates, as Microsoft’s cloud booms (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.