Global Market Quick Take: Asia – November 28, 2023

US Equities: In a quiet session, the S&P 500 slid 0.2% to 4,550 and the Nasdaq 100 ticked down 0.1% to 15,962. The real estate sector topped on performance amid falls in bond yields. Consumer discretionary advanced as Mastercard data showed a 2.5% Y/Y increase in retail sales during the Black Friday. Shopify gained 4.9%. Amazon added 0.7%, marking a new high since April last year. Affirm surged 12% as the usage of buy-now-pay-later spending increased by 19% Y/Y on Cyber Monday, according to data from Adobe.

Fixed income: Treasuries rallied strongly with the 10-year yield falling by 8bps to 4.39%. A large decline in German Bunds yields, softer US New Home Sales and Dallas Fed manufacturing index triggered the initial buying. The rally was sustained through the auctions of a total of $109 billion 2-year and 5-year notes which saw robust demand, in particular the 5-year action. On Tuesday, Treasury is scheduled to sell $39 billion 7-year notes. 

China/HK Equities: The Hang Seng Index retreated by 0.2%. Local Hong Kong developers as well as China developers declined. New World Development plummeted 6.4% to a 20-year low on fear of dividend cuts and an analyst downgrade. Longfor shed 4.1%. EV stocks showed weakness over price war concerns. Tech hardware outperformed, with AAC gaining 5% and Sunny Optical rising 2.7%. The CSI300 lost 0.7%, dragged down by communications, properties, and retailing. Meituan and PDD are reporting results on Tuesday.

FX: Dollar bearish sentiment continued to extend into the start of new week, but month-end corporate demand could bring some level of tactical support for the dollar. USDNOK closed below 200DMA at 10.66 and was seen extending the decline in the Asian morning with expectations of a Norges Bank rate hike supporting NOK. USDJPY seen extending declines to sub-148.50 in early Asian trading. NZDUSD moved above 200DMA around the 0.61 handle and AUDUSD also made strides above the 0.66 handle despite yuan being marginally weaker as China’s industrial profit growth disappointed. EURUSD struggling to push above 1.0960 resistance and GBPUSD also crawling slowly above 1.26 as month-end nears.  

Commodities: Crude oil unable to find a clear direction with the OPEC+ cuts in focus, while the Israel-Hamas war also extended its truce. Gold prices meanwhile managed to clear the October peak of $2010 barrier as it climbed to a six-month high amid lower yields and a weaker dollar. Our technical analyst sees the next barrier at $2039 but there is room up to previous peak of around $2070-78. Copper slipped on China’s industrial profit miss but supply issues continue to underpin.

Macro:

• US new home sales for October fell 5.6% to 679k, beneath the expected 723k and the previous 719k.
• China's industrial profit growth slowed in October to +2.7% Y/Y from +11.9% in the previous month. The material sector was the profit growth driver, rising 22.9%. Profits in the consumer goods manufacturing sector increased by 2.2% Y/Y in October. Industrial revenue improved to +2.5% in October from September’s +1.2%.
• ECB president Lagarde said the ECB will ‘probably’ discuss the reinvestment of its near EUR 1.7tn PEPP holdings. She also told European lawmakers that the labor market shows signs of weakening.

Macro events: Australia Retail Sales (Oct) exp 0.1% MoM (prev. 0.9%), US Consumer Confidence (Nov) exp 101 (prev. 102.6)

Earnings: PDD, Intuit, Meituan, Workday, CrowdStrike, Hewlett Packard, Café de Coral, L’Occitane

In the news:

• Xi chairs Politburo meeting on Yangtze River Economic Belt development (Xinhua)
• China’s Politburo holds monthly meeting but makes no mention of when the party’s much-anticipated plenum will take place; Xi underscores focus on growth with planned trip to Shanghai (SCMP)
• Fast-Fashion Giant Shein Files to Go Public (WSJ)
• Israel-Hamas truce in Gaza extended two days; 11 more hostages freed (Reuters)

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