Global Market Quick Take: Asia – September 12, 2024 Global Market Quick Take: Asia – September 12, 2024 Global Market Quick Take: Asia – September 12, 2024

Global Market Quick Take: Asia – September 12, 2024

Macro 6 minutes to read
APAC Research

Key points:

  • Equities: Equities closed higher, boosted by tech
  • FX: Japanese yen reversed its early gains as US dollar pushed higher post-CPI
  • Commodities: Oil prices rebound to near $68
  • Fixed income: 10-Year Treasury Yield Halts Six-Day Losing Streak
  • Economic data: ECB, US PPI and Jobless claims

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

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

0912 

Disclaimer: Past performance does not indicate future performance.

 

In the news:

  • Stock Market Today: S&P 500 rides Nvidia-led rally to close higher (Investing)
  • Aggressive Fed rate cut next week could backfire, putting big tech in crosshairs (Investing)
  • Bank of England to hold Bank Rate this month but cut in Nov, economists say: Reuters poll (Investing)
  • Global EV sales up 20% in August despite 19-month low in Europe, Rho Motion says (Yahoo)
  • ECB to cut interest rates as growth dwindles, outlook unclear (Yahoo)

Macro: 

  • US CPI was as expected on the headline figures but a notch above expectations for the core which rose 0.3% MoM vs. 0.2% expected amid upward surprises in shelter and transport services. This has prompted markets to reduce the odds of a 50bps Fed rate cut next week, however the market still expects 100bps of rate cuts for this year. The fundamental story of sustained disinflation remains unaltered by this inflation report, as the pick-up in the core index was driven by components that have a much smaller weight in the core PCE deflator, the Fed’s preferred inflation gauge, or which are sourced from the PPI.
  • UK’s monthly GDP stagnated for a second month in a row in July, coming in below expectations of 0.2% MoM. GDP on a three-month basis at 0.5% was also below the estimate of 0.6%. Industrial and manufacturing production fell and missed forecasts. While the BOE is not expected to cut rates next year, but expectations for a November rate cut are rising.

Macro events: ECB Policy Announcement – preview here, IEA OMR, US Jobless Claims (w/e 7th Sep), PPI Final Demand (Aug)

Earnings: Adobe, Restoration Hardware, Kroger, Signet, Big Lots 

Equities: US stocks closed higher on Wednesday, driven by tech stocks as investors evaluated the latest inflation data and its impact on the Federal Reserve’s upcoming policy decision. The S&P 500 rose 1%, marking its third consecutive session of gains, while the Nasdaq surged 2.2%, led by strong performances from chipmakers like Nvidia (+8%) and Broadcom (+6.7%). Dow Jones also gained 124 points. Inflation data showed headline prices at a three-year low, but core inflation rose 0.3%, higher than expected. This led to speculation that the Fed will opt for a smaller 0.25% interest rate cut at next week's meeting, with traders reducing the likelihood of a 50-basis-point cut to 13%. Politically, the presidential debate increased the chances of a Kamala Harris election victory, boosting solar stocks like First Solar (+15.2%) and pushing down crypto-linked stocks like Coinbase (-1%).

Fixed income: Treasuries ended a volatile session with higher yields, leading to a notably flatter yield curve. This followed an initial selloff driven by the August CPI data. Recoveries in crude oil and US stocks from early losses, along with bear-flattening in gilts, also influenced the market, as did strong demand for the monthly auction of 10-year notes. US front-end yields had risen by nearly 5 basis points, while long-end yields remained relatively stable. The CPI data, which showed a larger-than-expected increase in the core index and higher real earnings growth, led Fed-dated OIS contracts to almost certainly price in a quarter-point rate cut on September 18, reducing the likelihood of a half-point cut. Specifically, 26 basis points of easing were priced in for September, down from 30 basis points on Tuesday. The 10-year note auction in the US afternoon, a $39 billion reopening, yielded 3.648%, the lowest since May 2023 and 1.4 basis points below the WI yield indicated at the 1pm bidding deadline.

Commodities: WTI crude rose by 2.37% to $67.31, and Brent Crude increased by 2.05% to $70.61. Hurricane Francine, which is expected to impact Louisiana and has caused some offshore oil platforms to shut down. Despite the rebound, oil prices remain near their lowest since May 2023 US natural gas futures climbed above $2.27 per MMBtu, driven by seasonal demand, record LNG exports, and China's growing use of natural gas in transportation. Gold prices edged lower by 0.2% to $2,511 an ounce. Iron ore prices held steady above $91 as investors assessed Chinese steel demand during its peak season.

FX: The US dollar was initially weighed by yen’s strength on Wednesday and the somewhat better performance for Harris in the presidential debate questioning the ‘Trump Trades’ that are usually seen to be USD-positive. However, the hotter-than-expected US CPI report overnight pushed the US dollar higher as odds of a 50bps rate cut from the Fed next week were wound down. The Japanese yen, that had earlier printed a YTD high of 140.72 against the US dollar in the Asian session on BoJ's Nakagawa hawkish comments, also retreated again. We discussed yen’s upside in this article, and continue to expect a move below 140 to come if US recession concerns deepen. Activity currencies such as Australian dollar and Canadian dollar outperformed while the Swiss franc underperformed as recession odds retreated. The euro is heading lower amid the USD strength and the pivotal ECB meeting coming up where a rate cut is expected but forward guidance gets more weight.

 

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

For a global look at markets – go to Inspiration.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
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.