Global Market Quick Take: Asia – September 11, 2023

US Equities: Both the S&P500 and the Nasdaq 100 increased by approximately 0.1%, reaching 4,457 and 13,762, respectively. Apple recovered by 0.4% following a more than 6% decline over the previous two days, in anticipation of the upcoming launch of iPhone 15 this Tuesday. On Friday, the supermarket chain Kroger gained 3.1% after surpassing earnings expectations and resolving an opioid-related claim, despite falling short on revenue.

Fixed income: US Treasuries experienced a moderate sell-off with no significant news driving the movement ahead the quarterly refunding (3, 10 & 30-year Treasury acutions) this week. The 2-year yield rose by 4bps to 4.99%, while the 10-year yield increased by 2bps to 4.26%.

China/HK Equities: Due to the heaviest rainfall since 1884 and widespread flooding throughout the city, the Stock Exchange of Hong Kong was closed last Friday. On the mainland, the CSI300 declined by 0.5%, while semiconductor and defense stocks saw gains.

FX: USDJPY held strong, rising by 0.4% and closing near recent highs at 147.83, driven by the uptick in Treasury yields last Friday. Concurrently, USDCNH reached a new yearly high, surging to 7.3647. On Monday, USDCNH fell by 0.5% to below 7.33 after the PBoC fixed set a strong-than-expected rate at its daily fixing. USDJPY dropped below 147 as traders reacted to a Yomiuri newspaper interview with BoJ Governor Ueda, in which, Mr. Ueda said that it was possible the BoJ would have enough data and information about wage growth to determine the trend of inflation by the end of 2023. Market participants considered that Mr. Ueda is bringing the timing of revising the ultra-loose monetary policy closer.

Commodities: WTI crude remained near its yearly highs, closing up 0.4% on Friday at USD 87.51, while Brent crude settled at USD 90.65. This marked the first weekly closure of Brent crude above USD 90 since November of last year. The extension of supply cuts by Saudi Arabia and Russia until the end of the year, along with increases in diesel and gasoline crack spreads (refining margins), played a significant role in bolstering crude prices.

Macro: China's CPI change moderately rebounded to 0.1% Y/Y inflation, as expected, following July's -0.3% deflation. This uptick was supported by a low base from the previous year. On a monthly basis, the CPI increased by 0.3% in August, up from 0.2% in July. Meanwhile, the PPI contracted by -3.0% Y/Y, an improvement from July's -4.4%. This was attributed to a low base from the previous year and the recovery in domestic and global commodity prices.

Macro events: NY Fed survey of consumer expectations (Aug), US 3-year T-note auction ($44 billion), Japan M2 (Aug), Japan PPI (Aug)

In the news: The US and its allies announced at the G20 Summit to build a rail and shipping corridor linking India, Saudi Arabia, the UAE, Jordan, Israel, and the European Union (AP)

China’s National Administration of Financial Regulation announced on Sunday to ease regulations for insurance companies looking to invest in the constituents of the CSI 300 Index. The risk factor has been lowered from 0.35 to 0.3. Additionally, for investments in ordinary stocks listed on the Sci-Tech Innovation Board (STAR Market), the risk factor has been revised from 0.45 to 0.4 (NAFR).

Alibaba’s head of cloud division and former CEO Daniel Zhang resigned (Bloomberg)

Earnings events: Oracle (aftermarket, adj EPS est. USD1.152)

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