Global Market Quick Take: Asia – February 28, 2024

US Equities: While the S&P 500 Index and Nasdaq 100 Index climbed 0.2% to 5,078 and 17,971 respectively, the small-cap Russell 2000 index jumped 1.3% and Bitcoin surged to surpass 57,000 amid a rise in risk appetite. In the extended hours, eBay added more than 4% after reporting results beating analysts’ estimates, raising dividends, and announcing a $2 billion buyback. Today, after the market closes, Snowflake and Salesforce will report quarterly results.

According to the Bloomberg survey median, analysts anticipate that Salesforce will report revenues of $9.2 billion for Q4 of FY24, reflecting a 10% Y/Y increase, with EBITDA expected to reach $3.8 billion, up from $2.5 billion the previous year. Analysts are also expecting the company to guide an 11% Y/Y revenue growth for FY25.

Snowflake, with a strong connection to the AI trend, is expected to exhibit a revenue growth of 29% Y/Y, a decrease from the 54% growth observed in the previous year. There is potential for an upside surprise for Snowflake, particularly in relation to generative AI.

Hong Kong/China Equities: Li Auto surged a remarkable 25.5% following the release of its Q4 results, which surpassed expectations on all fronts. This impressive performance had a ripple effect, elevating the stock prices of other Chinese new energy vehicle (NEV) manufacturers by 3% to 6%. Additionally, SMIC and Hua Hong Semiconductors saw notable gains of 10.2% and 7.7%, respectively, in response to the State-owned Assets Supervision and Administration Commission of the State Council (“SASAC”) commitment to accelerating the development and expansion of the AI industry and the construction of data centers. The Hang Seng Index rose by 0.9% to 16,791, while the Hang Seng Tech Index advanced 3.2%. On the mainland, the CSI300 gained 1.2%, driven by strong performances in the semiconductor and TMT sectors. The anticipation of additional policy support from the National People’s Congress (“NPC”) starting on March 5, may sustain the current market rally in the short term. However, it is crucial to note that elevated prices could heighten the risk of disappointment emanating from the NPC. Today, Baidu and iQIYI are reporting quarterly results.

Fixed income: On an uneventful day, the 10-year yield ticked up 2bps to 4.30%. The $42 billion 7-year auction met with fair demand from investors.

FX: The FX market is taking a nap in the run upto the core PCE print due on Thursday, and the dollar was seen trading sideways again with EURUSD stuck around 1.0850 and GBPUSD steady around 1.2680. USDJPY slid to 150.10-levels in Tuesday’s Asian session following the higher-than-expected Japan inflation, but was back at 150.50 later in the day. Kiwi remains in focus today after giving up the 0.62 handle earlier this week and facing two-way risks ahead of the RBNZ decision today given hawkish expectations but a long positioning. USDCAD pushed higher to 1.3530, testing 100DMA at 1.3540 despite higher oil prices.

Commodities: Crude oil prices gained helped out by a report saying OPEC could extend voluntary cuts when officials meet next week. Base metals also returned higher after steep losses in iron ore stabilized with China equity markets ending the day higher. Gold reversed from $2,040 back to $2,030 as core PCE data is awaited.

Macro:

• US consumer confidence in February fell to 106.7 from 110.9 (downwardly revised from 114.8) and beneath the expected 115.0. Present Situation and Expectations fell to 147.2 (prev. 154.9) and 79.8 (prev. 81.5), respectively, with the latter dipping back beneath 80 which often signals a recession ahead. January Durable Goods data was also soft with the headline dipping 6.1%, deeper than the -4.5% forecast, while the prior was revised down to -0.3% from 0.0%.
• China's Ministry of Housing and Urban-Rural Development instructs local authorities to plan housing development for 2024-2025. Emphasizing demographic considerations, the directive aims to balance supply and demand, prevent market fluctuations, and prioritize affordable housing and upgrades.
• Chinese lawmakers approved a revised Law on Guarding State Secrets. Effective May 1, 2024, the revised secrecy law emphasizes the importance of secrecy in technological innovation and protection. It encourages classified scientific research to boost self-reliance in innovation, and safeguards intellectual property. The law specifies planning and operation standards for classified information systems, requiring checks and regular risk assessments. It also refines conditions, rights, and management requirements for classified personnel.
• In his budget speech today, Hong Kong's Financial Secretary is expected to tackle the sluggish property market by easing specific cooling measures, including stamp duties on property transactions. Additionally, support for the tourism industry is anticipated.

Macro events:  EZ Consumer Confidence (Final), US GDP (2nd), PCE Prices Prelim. (Q4), RBNZ Policy Announcement. Speakers: Fed's Bostic, Collins, Williams; BoE's Mann

Earnings: Salesforce, Snowflake, Monster Beverage, Universal Music, Reckitt Benckiser, Moncler, Amadeus IT, HP, Pure Storage, Baidu, iQIYI, MINISO Group, VIPSHOP, Daiwa House Logistics Trust, Holcim, Royal Bank of Canada, TJX.

In the news:

• Apple cancels work on electric car, source says (Reuters)
• EBay Reports Strong Holiday Quarter, Expands Buyback Plan (Bloomberg)
• Applied Materials receives subpoena from SEC on China shipments (Reuters)
• Trump could impose universal tariff on Day 1: ex-U.S. trade official (Nikkei Asia)
• US, allies set out 6G principles as tech rivalry with China heats up (SCMP)
• Shein Tempts London With Prospect of Biggest-Ever Listing (Bloomberg)
• Bitcoin scorches past $57,000 as big buyers flock in (Reuters)
• OCBC Q4 net profit rises 12% to S$1.62 billion; declares S$0.42 final dividend (Business Times)
• Beyond Meat tops revenue estimates, plans 'steep' cost cuts in 2024; shares soar (Reuters)

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

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