Global Market Quick Take: Asia – December 28, 2023 Global Market Quick Take: Asia – December 28, 2023 Global Market Quick Take: Asia – December 28, 2023

Global Market Quick Take: Asia – December 28, 2023

Macro 5 minutes to read
Redmond Wong

Chief China Strategist

Summary:  US Treasuries rallied, with the 10-year yield dropping by 10 bps to settle at 3.79%. The S&P 500 inched up 0.1%, approaching its record close of 4,797 from January 2022. The Hang Seng Index rebounded 1.7% to 16,625, driven by the recovery of online and mobile gaming stocks and the advancement of EV stocks. USDJPY extended losses amid falling US Treasury yields, the BoJ's lower limit for bonds, and Japan's stronger-than-expected retail sales and industrial production. Crude oil retreated, but copper and gold experienced gains.


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

US Equities: The S&P 500 edged up 0.1% to 4,782, propelling toward its record close of 4,797 in January 2022. Among the 11 S&P 500 sectors, healthcare, real estate, and consumer staples outperformed. Meanwhile, energy stocks declined as crude oil retreated. The Nasdaq 100 gained 0.2%, finishing at 16,907. The New York Times rose 2.9% after the publishing company filed a copyright infringement lawsuit against Microsoft and OpenAI. Tesla added 1.9% based on an analyst report suggesting strong delivery and price stabilization.

Fixed income: Treasuries rallied steadily throughout the Wednesday session in New York, with the 10-year yield dropping by 10 bps to settle at 3.79%, the lowest level since July. The auction of $58 billion 5-year notes met robust demand and was awarded at 3.801%, which was lower than the 3.815% traded at the auction deadline. The bid-to-cover ratio was 2.50 times, up from 2.46 times in the previous auction.

China/HK Equities: After a softer tone from the regulators and approval of a batch of new domestic games, online and mobile gaming stocks rallied. NetEase surged 11.9%, Bilibili rose 6.7%, and Tencent gained 4.0%. Nio soared 12.2% after the EV maker unveiled an executive sedan with a starting price of RMB800k. The rise in China’s industrial profits by 29.5% Y/Y in November helped lift sentiment. The Hang Seng Index rebounded 1.7% to 16,625. In the mainland, CSI300 rose 0.4%, led by computing, financials, and farming. Market chatters speculated if Central Huijin, an investment arm of the Chinese government, was once again increasing its stake in the four largest Chinese banks.

FX: DXY, the dollar index fell by 0.5% as both EURUSD and GBPUSD rose by 0.6% against the greenback. USDJPY extended its losses due to a combination of falling US Treasury yields, the BoJ setting a lower limit for some bonds in its bond-buying operation in Q1 2024, and stronger-than-expected retail sales and industrial production in Japan. USDJPY dropped to 141.30 in early Asian trading on Thursday.

Commodities: Crude oil consolidated its recent rally and retreated, with WTI crude falling by 1.9% to $74.1 and Brent crude dropping 2.1% to $79.3. Shipping companies are resuming transit through the Red Sea after a temporary suspension prompted by militia attacks on vessels. A US-led multinational operation is patrolling the Red Sea with the aim of safeguarding commercial shipping. According to data from the American Petroleum Institute, US crude inventories increased by 1.837 million barrels last week. Meanwhile, copper rose by 1.5% to $3.96 per pound, and gold extended gains by 0.5% to $2,077.

Macro:

  • Japan’s retail sales increased by 5.3% Y/Y in November, surpassing 5.0% forecasted and up from 4.1% (revised) in October. On month-on-month basis, retail sales increased by 1% versus 0.5% expected and -1.7% in the prior month. Industrial production also came in better than expected, showing a smaller decline of -1.4% Y/Y in November versus -2.1% expected but weaker than the +1.1% Y/Y in October.
  • The US Richmond Fed Manufacturing Index came in at -11 in December, which is softer than the expected -3 and down from -5 in November.
  • China’s industrial production increased by 29.5% Y/Y in November, accelerating from the 2.7% Y/Y in October. This marks the fourth consecutive month of year-on-year growth.
  • China’s Emerging Industries PMI declined to 49.8 in December from 54.7 in November.
  • According to Wind, new home sales in 21 major Chinese cities during the period from Dec 1 to 26 declined by 39.7% from the pre-COVID level in 2019.

Macro events:  US Jobless Claims, US Pending Home Sales, US Wholesale Inventories, Japan Industrial Production (Nov), Japan Retail Sales (Nov).

In the news:

  • Apple Resumes Sale of Watch Models After Appeals Court Lifts Ban (Bloomberg)
  • Oil drops almost 2% as investors monitored developments in the Red Sea, where shippers are returning despite further attacks (Reuters)
  • NY Times sues OpenAI, Microsoft for infringing copyrighted works (Reuters)
  • Year-End Money-Markets Angst on Fed Exit Echoes 2018 Crunch (Bloomberg)
  • Trump can remain on Michigan primary ballot, state supreme court rules (Politico)

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