Global Market Quick Take: Asia – February 7, 2024 Global Market Quick Take: Asia – February 7, 2024 Global Market Quick Take: Asia – February 7, 2024

Global Market Quick Take: Asia – February 7, 2024

Macro 7 minutes to read
APAC Research

Summary:  The run higher in Treasury yields and US dollar took a breather, but equities were choppy as sentiment turned cautious amid a further plunge in NYCB stoking CRE and regional banking sector concerns. China stocks were supported by increased hopes of government intervention, and Alibaba results will be in focus today. NZDUSD jumped higher on a strong Q4 employment report, while AUD also extended gains after a hawkish-leaving rhetoric from RBA yesterday.

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

US Equities: Major indices ended mixed on Tuesday, with the Nasdaq 100 pulling back 0.2% to 17,573 while the S&P 500 added 0.2% to 4,954. Semiconductor stocks retreated. Nvidia declined 1.6% and AMD fell 3.6%. Eli Lilly surged initially after reporting earnings beating estimates and sales of its diabetes/off-label weight loss drug jumping to $2.2 billion in Q4 from $0.28 billion a year ago, before paring all gains to end the session 0.2% lower. New York Community Bancorp sank 22.4% after Moody’s downgraded the bank’s credit rating by two notches to Ba2. Meanwhile, Palantir Technologies soared 30.7% on an upbeat 2024 outlook. In the extended hours, Snap plummeted nearly 33% after the social media company reported Q4 revenue below expectations and said Q1 adjusted EBITDA will be a loss of between $55 and $95 million.

Fixed income:  The selloff in Treasuries, which was triggered by a strong non-farm payroll report on Friday and Powell’s 60 Minutes interview on Sunday, finally paused as bargain hunters showed up. The demand at the $52 billion 3-year Treasury note auction drew robust demand. The 10-year yield fell 6bps to 4.10% and the 2-year yield finished 7bps lower at 4.40%. Today, the Treasury is auctioning $42 billion in 10-year notes.

China/HK Equities: The Hang Seng Index and the CSI 300 Index rallied sharply by 4% and 3.5% respectively on state-controlled funds buying of A shares and a Bloomberg report that President Xi is set to receive a briefing from the country’s financial regulators. In our opinion, the boost from market intervention tends to fade within days. In this article, we discuss the formidable challenges that are confronting the Chinese equity market.

Alibaba shares surged by 7.6%. The e-commerce and cloud service giant is set to announce its December quarter results on Wednesday, with an anticipated 5.4% Y/Y growth in revenue, reaching RMB 261.2 billion. This growth is affected by soft customer management revenue (CMR), attributed to a higher Taobao contribution to the Gross Merchandise Value. Taobao charges merchants no commission, unlike Tmall. Cloud revenue growth is expected to remain sluggish. The Bloomberg consensus forecast estimates adjusted net income at RMB 47.9 billion.

FX: Yields and dollar took a breather after strong gains at the start of the week, and DXY index closed below 100DMA at 104.31 although staying above 104. AUDUSD failed at the 0.6520 attempt in the first go but broke higher this morning, bringing the 100DMA at 0.6537 in view with RBA staying relatively hawkish for now. AUDNZD however returned to test the 1.07 handle this morning in Asia with NZDUSD jumping higher to 0.61 on stronger job growth for Q4 showing employment rose 0.4% QoQ from -0.1% previously. EURUSD stuck around 1.0750 but GBPUSD making another attempt above 1.26 pushing EURGBP back below 0.8540 despite BOE Chief Economist Huw Pill suggesting a rate cut for this year. USDJPY back below 148.

Commodities: Sentiment in the commodities space was boosted on the back of expectation that measures from China will likely expand. Oil prices gained with the risk-on tone and supply concerns remaining in focus, although API inventories showed a large crude inventory build of 674k barrels last week. Gold gained traction as Treasury yields pulled back, and Ole Hansen discusses what shifts in monetary policy expectations can mean for precious metals here.


  • Fed speakers continued to pushback on rate cut expectations. Mester (voter) said she sees no need to rush [on rate cuts], but she clarified that she still leans towards three rate cuts in 2024. Kashkari (non-voter) highlighted the "conundrum" that inflation has come down very quickly but the labour market is very strong. To listen to our thoughts on the path of Fed from here, tune in to the latest episode of our Saxo Market Call podcast.
  • Treasury Secretary Janet Yellen said she is “concerned” about losses in commercial real estate, but told Congress that regulators are working to ensure that loan-loss reserves and liquidity levels in the financial system are adequate to cope.
  • Reserve Bank of Australia retained its hawkish bias yesterday, in an unsurprising move after the recent pushback to easing seen from Fed, ECB and other major central banks. However, growth and inflation forecasts were revised lower for this year, but sees inflation reaching the midpoint of the 2-3% band only in 2026.

Macro events: US Trade Balance (Dec), Germany Industrial Production (Dec), US Treasury 10-year auction. Speakers: Fed Kugler, Collins, Barkin, Bowman, Remache, Nordstorm. BOE Catherine Mann.

Earnings: Alibaba, Walt Disney, TotalEnergies, Uber, CVS Health, Equinor, ARM, Vinci, McKesson, PayPal, Yum China.

In the news:

  • Trump is not immune from prosecution in his 2020 election interference case, US appeals court says (AP)
  • China intervenes as stock rout reaches US$5 trillion amid ‘uber-weak’ confidence, regulator heightens scrutiny reminiscent of 2015 crash (SCMP)
  • Toyota raises profit forecast to record high amid strong sales (Nikkei Asia)
  • Toyota to invest in TSMC's Kumamoto plant in Japan (Nikkei Asia)
  • China, Russia and Iran to hold navy drills aimed at ‘regional security’, admiral says as Middle East tensions flare (SCMP)
  • Tencent-backed video game live-streamers Douyu and Huya deny merger rumours as ByteDance deal threatens their status (SCMP)


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

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