Global Market Quick Take: Asia – October 25, 2023

Global Market Quick Take: Asia – October 25, 2023

Macro 5 minutes to read
Saxo Be Invested
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.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

The information on or via the website is provided to you by Saxo Bank (Switzerland) Ltd. (“Saxo Bank”) for educational and information purposes only. The information should not be construed as an offer or recommendation to enter into any transaction or any particular service, nor should the contents be construed as advice of any other kind, for example of a tax or legal nature.

All trading carries risk. Loses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money.

Saxo Bank does not guarantee the accuracy, completeness, or usefulness of any information provided and shall not be responsible for any errors or omissions or for any losses or damages resulting from the use of such information.

The content of this website represents marketing material and is not the result of financial analysis or research. It has therefore has not been prepared in accordance with directives designed to promote the independence of financial/investment research and is not subject to any prohibition on dealing ahead of the dissemination of financial/investment research.

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.