Global Market Quick Take: Asia – April 25, 2024

Equities: US equities eked out small gains as Tesla jumped 12% after its earnings announcement the day before where it said that the EV-maker was accelerating the launch of new and more affordable EV models. Read this article for our take on what investors should look out for in Tesla. However, futures are in red at the Asia open with NASDAQ 100 futures down over 1% as Meta earnings after-hours disappointed with weaker-than-expected outlook and stock slumped 15%. Other tech peers such as Microsoft and Alphabet were also lower in post-market, and both of these are next in the earnings line with their Q1 results due today after-market.

Weak tech sentiment is likely to spill over to Asia, and Nikkei shares could threaten a move back below the key 38k level after it closed 2.4% higher yesterday. Momentum in Hong Kong’s HSI also continued to build yesterday as it jumped to five-month highs on valuation discount and China’s pledge to support the status of HK as a financial hub.

FX: The dollar was modestly higher on the back of higher yields, but not enough for the DXY index to break above the 106 mark as attention turns to US preliminary GDP for Q1 and initial claims data today. Strong labor market, with payrolls at 303k in March, along with a pickup in the manufacturing cycle and a still-strong consumer suggest the US GDP could surprise to the upside, which is likely to boost the dollar and put the activity currencies (AUD, NZD, GBP) on the backfoot. USDJPY is also a big focus, having breached the key 155 level to fresh 34-year highs of 155.37 overnight but an intervention at this stage may be futile with US GDP next and QRA next week likely pushing Treasury yields higher. AUDUSD made a round-trip to 0.6530 highs as 200DMA provided resistance following a higher-than-expected Q1 CPI yesterday. AUDJPY rose to record highs but psychological resistance at 101 offered resistance. USDCNH continued its ascent as well and rose to 7.2735 with CNHJPY at record highs at 21.37 and response from Chinese authorities will be on watch today.

Commodities: Crude oil prices saw modest losses with Brent around $88 and WTI below $83/barrel, despite US inventories showing a decline of 6 million barrels last week. Markets could be in a risk off mood today if US GDP further weakens the conviction on Fed rate cuts, and this could be a headwind for commodities. Gold has been range-bound around $2,320 and support at $2,300 remains in focus, while support for Silver is seen at $26.50. Copper was also back in gains, up 0.6% but still below the 2-year highs seen earlier this week.

Fixed income: US 10-year yields rose 4bps to 4.64%, but losses in European bonds were more pronounced with UK yields up over 9bps and German yields up close to 9bps following upbeat German Ifo. Focus today on US GDP and any hit to equity sentiment that can drive haven demand.

Macro:

• Australia’s Q1 CPI came in higher-than-expected at 1.0% QoQ (prev: 0.6%, exp: 0.8%) and 3.6% YoY (prev: 4.1%, exp: 3.5%). Gains were broad based as trimmed mean rose 4.0% YoY vs. 3.8% expected. This has given room to ‘higher-for-longer’ positioning, with the RBA preaching patience on inflation. The Federal Budget due in May could be key as well, and focus will be on the breadth of 'cost of living' support measures and how that can further fuel inflationary pressures. For now, it appears that the market will see no urgency to price in RBA rate cuts for this year.
• German Ifo numbers for April signaled small improvements in the economy. The headline rose to 89.4 from 87.8 (vs. 88.8 expected) as both current conditions (88.9 from 88.1) and expectations index (89.9 from 87.7) increased.

Macro events: US GDP/PCE (Q1), Initial Jobless Claims, German GfK Consumer Sentiment (May). Speakers: ECB’s Schnabel

Earnings: Kweichow Moutai, Airbus, AstraZeneca, Caterpillar, Union Pacific, Microsoft, Alphabet, T-Mobile, Intel, Merck & Co, Comcast, Nestle, Sanofi, BNP Paribas, Dassault Systemes, STMicroelectronics, BASF, Deutsche Bank, Keyence

In the news:

• Meta shares sink on higher AI spending, light revenue forecast (Reuters)
• Ford Beats Sales Estimates on Strong Demand for Work Trucks (Bloomberg)
• Boeing reports first revenue drop in 7 quarters as deliveries decline (Reuters)
• UBS Analyst Who Took On Evergrande Now Bullish on China Property (Bloomberg)
• Indonesia Rate Hike May Not Be Enough to Spur Rupiah Rally (Bloomberg)
• China's BYD seeks to redefine luxury for the EV generation (Reuters)
• TikTok CEO expects to defeat US ban: 'We aren't going anywhere' (Reuters)

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

For a global look at markets – go to Inspiration.