Global Market Quick Take: Asia – April 1, 2024 Global Market Quick Take: Asia – April 1, 2024 Global Market Quick Take: Asia – April 1, 2024

Global Market Quick Take: Asia – April 1, 2024

Macro 6 minutes to read
Redmond Wong

Chief China Strategist

Summary:  Last Friday, the US core PCE inflation came in below expectations at 0.261% M/M and, softer than the forecast of 0.3%. This morning, US index futures, including S&P 500 eMini and Nasdaq 100, rose in Asian trading. The dollar held steady against major currencies. Gold surged to $2,256, hitting a new high on the back of softer US core CPI. The Nikkei 225 plunged 1.5% after the Bank of Japan's Tankan survey showed manufacturing activities at 11 in Q1, below the previous quarter's 12. China's official manufacturing PMI rose to 50.8, surpassing forecasts and returning to expansion territory.


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

Equities: US index futures advanced on Monday Asian morning, with the S&P 500 eMini futures and Nasdaq 100 futures adding around 0.4% and 0.6%, respectively, from their closing levels last Thursday. Before the holiday, the US GDP was revised up, and consumer sentiment came in strong on Thursday. Additionally, the personal spending print released on Friday was strong, but the core PCE inflation was slower than anticipated. These data continue to point to a Goldilocks US economy, providing comfort to equity investors.

In Japan, the Nikkei 225 plunged 1.5% after the Bank of Japan’s Tankan report showing softer manufacturing activities. In mainland China, the CSI300 surged around 1.5% in early trading on Monday, adding to its 0.5% gains last Friday. Sentiments were propelled by speculation that the People’s Bank of China will be buying Central Government Bonds (CGBs), following the latest publication of remarks from President Xi, including his call for more monetary tools, which include buying and selling government bonds by the country’s central bank.

Additionally, China’s official NBS manufacturing PMI, released on Sunday, and Caixin China manufacturing PMI, released this morning, both improved more than expected. The NBS manufacturing PMI returned to the expansion territory. The Hong Kong market remains closed on Monday for a holiday.

Results released from some of China’s largest banks last Thursday showed notably weak net interest margins (NIM) as a common observation across these banks. Bank of China's revenue and earnings missed on NIM, Construction Bank experienced small misses on NIM and fees, Agricultural Bank of China slightly beat revenue and earnings in line with stronger gross loan growth, but partly offset by weakness in net interest margins (NIM). Postal Savings Bank of China had slight revenue beat, but earnings missed on fees and higher provision charges.

FX:  The dollar remains steady as the Dollar Index hovers around 104.50, with EURUSD, USDJPY, and AUDUSD trading within narrow ranges, nearing 1.0790, 151.25, and 0.6525 respectively. A softer-than-expected US core PCE and dovish-leaning remarks from Powell on Friday tend to weigh on the dollar, while market reactions were muted, with traders in major markets away for holidays.

Commodities:  Gold surged to $2,256 during Monday's Asian trading hours, reaching a new high amid cooler-than-expected US core PCE data.

Fixed income: This morning in the Tokyo market, reactions to the US PCE inflation data from Friday were muted, with the 10-year Treasury yield at 4.19%, 1bp below last Thursday’s New York close before the holiday-shortened week.

Macro:

  • In February, US headline PCE growth slowed to 0.3% M/M, falling below the consensus of 0.4%. Notably, the core CPE inflation, the Fed's preferred gauge, came in softer than expected at 0.261% M/M, below the median forecast of 0.3% in the Bloomberg survey. Additionally, January's data was revised up to 0.452% from 0.475%, still below some economists' expectations. The downside surprises were primarily driven by softer prints in super-core service prices. On a year-on-year basis, the headline PCE increased by 2.5%, matching consensus expectations, while the core PCE rose 2.8%, slightly below the consensus of 2.8% and revised from 2.9%.
  • Consumer spending in the US showed resilience, increasing by 0.8% M/M in February, surpassing the anticipated 0.5% and exceeding the previous month's 0.2%.
  • Federal Reserve Chair Jerome Powell's remarks indicated a dovish-leaning stance as he stated that the February PCE inflation prints were more aligned with the Fed's targets, downplaying the hotter January data.
  • The US economy's strength was reaffirmed as the Q4 GDP was revised up to 3.4% from the previously reported 3.2%.
  • In Japan, the larger manufacturing enterprises index in the Bank of Japan's Tankan business confidence survey came in at 11 in Q1, slightly below the prior quarter’s 12 but above the projected 10. The outlook improved to 10 in Q1 from last quarter’s 8.
  • The Tokyo core CPI (all items less fresh food) grew as expected at 2.4 Y/Y in March, but slightly slower than the 2.5% in February. The core-core CPI (all items less fresh food and energy) slowed to 2.9% Y/Y, in line with expectations and below the prior month’s 3.1%.
  • China's official NBS manufacturing PMI rose to 50.8, signaling expansion and surpassing the Bloomberg surveyed consensus of 50.1 and the prior month’s 49.1. The rebound was broad-based, particularly led by strong surges in the production sub-index to 52.2 from 49.8 and the new orders sub-index to 53.0 from 49.0. The new export orders sub-index also rebounded to 51.3 from 46.3. The non-manufacturing PMI also came in stronger at 53.0, versus the projected 51.5 and the prior month’s 51.4. Meanwhile, the private Caixin China manufacturing PMI ticked up to 51.1, better than the anticipated 51.0 and the prior month’s 50.9.

Macro events: US S&P Manufacturing PMI, US ISM Manufacturing Index, US Construction Spending

Earnings: Tianshui Huatian Technology, Universal Scientific Industrial

In the news:

  • Chinese Stocks Gain as Upbeat PMI Data Reinforce Recovery Hopes (Bloomberg)
  • Japan's March factory activity shrinks at slower pace, PMI shows (Reuters)
  • Xiaomi's EV buyers face up to seven-month wait for car, app shows (Reuters)
  • Singapore Home Prices Rise for Third Quarter, Defying Slowdown (Bloomberg)
  • South Korea March exports up for sixth month on chip sales (Reuters)
  •  

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

For a global look at markets – go to Inspiration


 

 

Disclaimer

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.