Global Market Quick Take: Asia – October 25, 2023

Global Market Quick Take: Asia – October 25, 2023

Macro 5 minutes to read
Saxo Be Invested
APAC Research

Summary:  US equities halted the recent run lower with strong earnings and guidance from Coca-Cola, 3M and GE while Treasury yields also steadied after Monday’s moves. European PMIs underperformed US, bringing the dollar higher once again but AUD was the outperformer on hawkish comments from RBA Governor Bullock. Microsoft earnings brought AI enthusiasm again while Alphabet disappointed and focus turns to Meta today.


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

US Equities: US stocks ended the day in gains, halting a 5-day drop as earnings such as from Coca-Cola, GE and 3M boosted risk appetite and Treasuries also stabilized after Monday’s moves. Strong US PMIs also eased concerns of an immediate recession, and Q3 GDP data out tomorrow is also expected to be strong. However futures are pointing lower after Microsoft and Alphabet reported earnings after the bell. Microsoft jumped over 3% as AI best boosted the cloud business, but Alphabet shares were down 6% as it missed expectations.

Fixed income: Choppy day for US Treasuries as European and US PMIs underpinned, and the 2 year auction was relatively soft. 2-year ended the day 6bps higher as stronger PMIs put more weight on Fed’s higher-for-longer message, while 10-year was down nearly 3bps.

China/HK Equities: Despite a 0.4% rebound in the CSI300 driven by Central Huijin's purchase of index ETFs, the Hang Seng Index extended its losing streak to four sessions, dropping by 1.1% to close at 16,992, slipping below the 17,000 mark on Tuesday. China's internet stocks displayed weakness, with Alibaba declining by 1.7% and Tencent plummeting by 2.1%. Additionally, China's property sector faced a sharp decline as S&P warned that China's 2024 growth might be limited to 2.9% if the property crisis worsens. However, sentiment was revived for now and futures are pointing higher with stimulus announcements around issuance of more sovereign debt.

FX: The diverging US and European PMIs brought some strength back into the US dollar after Monday’s losses and the USD is now unchanged on the week to date basis. EURUSD plunged back below 1.06 from highs of 1.0694 while EURGBP made a round trip back to 0.87+ as GBPUSD slid back below 1.22 handle. USDJPY still close to the 150 area while AUD outperformed hitting highs of 0.6379 after commentary from RBA's Bullock who said the board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation. That could make AUD extremely sensitive to Australia’s Q3 CPI release today.

Commodities: Crude oil extended losses as geopolitical risks were not seen to be widening amid delays in Israel’s ground invasion of Gaza, and announcements of China stimulus or higher US PMIS not offsetting the decline in war premium as demand outlook remains weak. Copper bounced higher while Gold was relatively stable after being supported at $1955 as safe-haven bid retreated and strong dollar underpinned, but long-end treasury yields declined slightly.

Macro:

  • Preliminary PMIs for September showed European underperformance while US is still holding steady. Eurozone composite PMI slipped back to 46.5 from 47.2 with manufacturing staying weak at 43 while services disappointed, slipping back to 47.8 from 48.7 (48.6 expected). Hope for continued stabilisation in German services disappointed, with a fall to 48.0 in the German Services PMI after briefly eking above 50 last month.
  • US PMIs where slightly stronger than expected, the composite at 51.0 from 50.2. Manufacturing PMI rose back into expansionary territory, albeit only just, to 50.0 (prev. 49.8) against the expected 49.5. Services rose to 50.9 from 50.1, despite consensus for a decline to 49.9.

Macro events: Bank of Canada rate exp 5.0% vs. 5.0% last, Australian CPI (Q3) exp 5.3% YoY vs. 6.0% prior, German Ifo Survey (Oct) exp 86 vs. 85.7 prior

Earnings: Meta, Thermo Fisher Scientific, T-Mobile, IBM, Service Now, Boeing, China Unicom,

In the news:

  • China to issue additional central government bonds to support disaster relief (Xinhua)
  • China's Xi makes first known visit to central bank -sources (Reuters)
  • China Growth May Fall to 2.9% If Property Crisis Widens, S&P Says (Bloo,mberg)
  • China sacks missing defence chief Li Shangfu with no explanation (SCMP)
  • Microsoft sales beat estimates as customers prepare for AI rollout (Reuters)
  • Google-parent Alphabet's cloud division misses revenue estimates, as Microsoft’s cloud booms (Reuters)

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

For a global look at markets – go to Inspiration.

Quarterly Outlook

01 /

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...

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
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 is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo 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 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