Global Market Quick Take: Asia – September 24, 2024

Global Market Quick Take: Asia – September 24, 2024

Macro 6 minutes to read
Saxo Be Invested
APAC Research

Key points:

  • Equities: Tesla climbed 4.9% ahead of its robo taxi launch on Oct 10
  • FX: The euro plunged across the board on PMI weakness
  • Commodities: Gold continues to break all-time highs
  • Fixed income: 3 month Treasury yield continues to fall
  • Economic data: RBA decision, German Ifo, US consumer confidence

------------------------------------------------------------------

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

0924 

Disclaimer: Past performance does not indicate future performance.

 

In the news:

  • Biden proposes banning Chinese vehicles from U.S. roads with software crackdown (CNBC)
  • Euro zone business activity unexpectedly contracts in September, PMI shows (Reuters)
  • Indian shares continue to scale new peaks after U.S. rate cut (Reuters)
  • UniCredit boosts its stake in Commerzbank, applies to own up to 29.9% of the German bank (CNBC)
  • Biohaven Surges After Delaying Progression By Up To 70% In A Rare Disease (IBD)
  • Trump Media plummets 10% as post-lockup selloff picks up steam (CNBC)
  • Fed officials leave door open to another large interest-rate cut (BT)

Macro:

  • PMI data was weaker across the board, but weakness in Europe, particularly in Germany, was the most alarming. German manufacturing PMI for September slipped to 40.3, its lowest levels in a year, from 42.4 in August. This signaled structural manufacturing woes for Germany. Meanwhile, France’s services PMI also reverted back to contraction at 47.4 from August’s Olympics-driven surge to 53.1. Overall, Eurozone composite PMI fell to 48.9 in September from 51.0 in August. UK’s PMIs also slowed but still remained in expansion and looked far more robust than the Eurozone’s with manufacturing PMI at 51.5 and services at 52.8 from 52.5 and 53.7 respectively in August. US manufacturing flash PMI for September also unexpectedly fell to 47.0 from 47.9 (exp. 48.5), while services declined less than forecast to 55.4 (exp. 55.2, prev. 55.7), which meant composite marginally dipped to 54.4 from 54.6.
  • Fed speakers generally supported the 50bps rate cut decision from last week and remained open to more such jumbo moves if labor market deteriorated sharply. Kashkari noted that the balance of risks have shifted towards risk of further labor market weakening and higher unemployment. Atlanta Fed President Bostic said that the economy is normalising more quickly than previously thought, so monetary policy needs to as well. Goolsbee stated that many additional rate cuts will likely be needed over the next year, stressing the need for rates to be lowered "significantly".

Macro events: RBA Policy Announcement; German Ifo (Sep), US Consumer Confidence (Sep), Richmond Fed (Sep), Fed’s Bowman, BoJ's Ueda, BoC's Macklem

Earnings: AutoZone, KB Home and Thor Industries

Equities: The S&P 500 rose by 0.3%, while the Dow Jones gained 0.1%, both achieving new record highs on Monday after last week's rally driven by the Fed's first rate cut in four years, set at 50 basis points. The Nasdaq 100 also edged up by 0.3%. Investors closely analyzed comments from several policymakers to understand the rationale behind the Fed's significant rate cut. Fed officials, including Raphael Bostic, Neel Kashkari, and Austan Goolsbee, expressed support for the recent cut and hinted at the possibility of further reductions in the coming months. Among stocks, Intel shares jumped 3.4% following reports of potential multibillion-dollar investments from Apollo Global Management. Tesla climbed 4.9% as investors anticipated the upcoming robotaxi launch and third-quarter sales figures. However, concerns over economic growth persist, with US manufacturing data hitting a 15-month low and job market indicators showing signs of weakening.

Fixed income: Treasuries ended with minimal changes, and the yield curve steepened after volatile trading during U.S. hours driven by Federal Reserve commentary and a sharp decline in oil prices. Initially, yields rose when two Fed officials indicated a high threshold for further half-point rate cuts. The market rebounded as oil prices plunged, supported by haven demand before Iran’s president signaled a willingness to ease tensions with Israel. Treasury yields had returned to nearly unchanged levels from the belly to the long end, with 2-year yields declining by about 1 basis point, which steepened the 2s10s spread by just over 1 basis point for the day. Fed swaps showed little price movement, continuing to price in around 75 basis points of rate cuts over the two remaining policy meetings this year.

Commodities:  WTI crude oil futures fell 0.89% to $70.37 per barrel, and Brent Crude futures declined 0.79% to $73.90 per barrel, influenced by concerns over weak demand from China and an unexpected slowdown in European manufacturing. The eurozone reported a surprising contraction in business activity, with stagnation in services and further deterioration in manufacturing output. Conversely, Nymex front-month natural gas surged 7.4% to $2.613 per mmBtu, reaching its highest level in nearly three months. Gold prices hit new record highs, rising 0.26% to $2,628.72, while silver dropped 1.55% to $30.69. Iron ore prices with 62% iron content fell below $90 again due to demand uncertainties and high inventories. Recent economic reports from China continue to indicate a challenging recovery.

FX: The relative weakness in European PMI was discussed in the Weekly FX Chartbook yesterday and turned out to be the key theme in FX markets yesterday. This made euro the underperformer among the major currencies as markets increased the odds of an October ECB rate cut. Euro’s weakness was most pronounced against the activity currencies kiwi dollar and Australian dollar, and it also fell over 0.6% against the British pound amid the odds of diverging economic and policy dynamics. Germany’s Ifo will be in focus today given risks of a recession signaling need for faster rate cuts from the ECB. The weakness in euro also filtered through to other European currencies, particularly the Scandies. The Australian dollar will be on in focus today with the RBA expected to leave rates unchanged and potentially keep a hawkish stance with risks of a recession still at bay. China’s central bank has also cut policy rates yesterday, and a press conference from the PBoC is eyed today, given more stimulus measures could further boost commodity currencies.

 

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

For a global look at markets – go to Inspiration.

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • 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

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

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