Global Market Quick Take: Asia – January 12, 2024 Global Market Quick Take: Asia – January 12, 2024 Global Market Quick Take: Asia – January 12, 2024

Global Market Quick Take: Asia – January 12, 2024

Macro 5 minutes to read
APAC Strategy Team

Summary:  The US December CPI showed a bumpy path in disinflation, with higher headline inflation and a core that didn't cool as expected. Despite this, Treasury yields declined, with the 2-year yield falling 11bps to 4.25%, as investors didn't see the data affecting the Fed's rate-cut likelihood. ECB's Lagarde expressed confidence in managing inflation and stated that interest rates have peaked. Oil prices rose due to increased Mideast tensions. USDJPY traded lower amid escalating geopolitical risks. The US earnings season commenced with major banks reporting today.


Saxo’s Q1 2024 Outlook titled “What happened to the future” is now out. You can read it here.

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

US Equities: Stocks recovered from their post-CPI losses, with the Nasdaq 100 inching up 0.2% to 16,821 while S&P 500 sliding 0.1% to 4,780, amid falls in Treasury yields. The US earnings season starts, with JPMorgan, Bank of America, Wells Fargo and Citigroup, among others, reporting today.

Fixed income: In spite of a hotter-than-expected CPI report, Treasury yields finished the session lower, led by a 11bp decline in the 2-year yield to 4.25%. The 10-year yield fell 6bps to 3.97%. Investors brushed off the CPI prints, considering them not consequential to the Fed’s inclination to cut rates. The $21 billion 30-year Treasury bond auction went well with decent demand. Across the pond, the ECB President, Christine Lagarde said the European Central Bank will start cutting rates once it is convinced that inflation is falling towards the 2% target.

China/HK Equities: The Hang Seng Index ended a 7-day streak of losses, rebounding 1.3%. Technology and pharmaceutical stocks led the advance. Wuxi Biologics and Wuxi Apptec were the two best performers with the benchmark index, followed by Meituan, which gained 5.4%. Reports of SOE banks being instructed by the PBoC to extend loans at preferential rates to cities to take over residential projects to turn into affordable rental housing and plans of issuance of long-term special government bonds helped boosted the sentiment somewhat. Additionally, the Chinese Academy of Sciences projected the Chinese economy to grow at 5.3% in 2024. The CSI300 Index climbed 0.6%.

FX: Dollar gained on the CPI uptick, but gains were reversed later and it ended the session only marginally higher. Japanese yen was a standout performer despite a gain to 146.41 in USDJPY after the CPI release. Pair traded lower and extended the decline to 145 in early Asian hours amid risk off as airstrikes on Houthis increased escalation risks for Mideast tensions. EURJPY testing 159 and AUDJPY testing 97 handles. GBPUSD is another pair to watch as it is back to test the 1.2770-levels that has held up multiple times since end-December, and UK monthly GDP is on the radar today. EURUSD also still close to a test of 1.10, while AUDUSD attempting a move back above 0.67 with China yuan support continuing and rate cut in focus for next week.

Commodities: Oil prices surged higher as Mideast tensions ratcheted up. The US and UK launched airstrikes against Houthi rebel targets in Yemen, and Iran also raised stakes as its Navy captured an oil tanker off the coast of Oman. Risk of escalation could unnerve markets. Gold was down post-CPI but reversed from $2,015, rising back to $2,030 and extending the gains in Asia on Mideast tensions.

Macro:

  • US December CPI reaffirmed that the last leg of disinflation is proving bumpy as headline inflation rose and core did not cool as expected. Both headline and core rose 0.3% MoM (vs. 0.1% and 0.3% respectively earlier) while the headline YoY rose 3.4% from 3.1% in November and 3.2% expected. Core was at 3.9% YoY from 4.0% previously, but higher than the 3.8% expected. Core goods prices were flat after being in decline for the last six months. Core services inflation eased a notch, but shelter inflation, which the market has been waiting to come down, rose by 0.4% MoM, remaining elevated at 6.2% YoY but lower than 6.5% last month. Services less rent rose 0.6% MoM and 3.5% YoY.
  • Jobless claims for the week ended 6 Jan ticked lower to 202k from 203k previously and below the 210k expected. Continued claims (w/e 30th Dec) declined to 1.834mln from 1.868mln and shy of the consensus 1.871mln.
  • A host of Fed speakers were on the wires. Loretta Mester said that a March rate cut is too early for her while Thomas Barkin noted he would not prejudge outcome of March or other meetings. Both are voters this year. Goolsbee (2025 voter) also did not specify a bias for the March decision, but all three seemed to agree that December inflation was not a surprise.
  • ECB’s Lagarde was also talking and she expressed confidence in the European Central Bank's handling of inflation, and confirmed that interest rates have reached a peak although she cannot predict when they might decrease.
  • Taiwan is holding elections this Saturday to elect a new president and vice-president, as well as the 113 members of a new parliament – the Legislative Yuan. Polls showing a lead of the Lai Ching-te and Hsia Bi-Khim, candidates of the incumbent Democratic Progressive Party (DPP) in the presidential race, followed by Hou Yu-in and Jaw Shau-kong of the Kuomintang (KMT), and then Ko Wen-je and Wu Hsin-ying of the Taiwan People’s Party (TPP). The fight over the seats at the Legislative Yuan is severe and there is a possibility that the DPP may not maintain a majority there.

Macro events: China CPI/PPI (Dec), China Trade (Dec), China Aggregate Financing (Dec), UK GDP (Nov), US PPI (Dec), Canada Housing Starts (Dec). Also on Saturday, key will be the Taiwan presidential/parliamentary elections.

Earnings: United Health, JPMorgan Chase, Bank of America, Wells Fargo, BlackRock, Citigroup, Bank of NY Mellon

In the news:

  • US, UK Launch Airstrikes on Houthi Rebel Targets in Yemen (Bloomberg)
  • Airbus lands record orders in 2023, beats Boeing on deliveries (Reuters)
  • Bitcoin ETF Trades Top $4.6 Billion in ‘Ground-Breaking’ Day (Bloomberg)
  • Tesla Berlin to stop most output for two weeks due to Red Sea disruption (Reuters)

 

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

For a global look at markets – go to Inspiration.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

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. Android is a trademark of Google Inc.

©   since 1992