Global Market Quick Take: Asia – July 12, 2023 Global Market Quick Take: Asia – July 12, 2023 Global Market Quick Take: Asia – July 12, 2023

Global Market Quick Take: Asia – July 12, 2023

Macro 7 minutes to read
Redmond Wong

Chief China Strategist

Summary:  The S&P500 and Nasdaq 100 saw modest gains, with a 0.7% and 0.5% increase respectively, spread across all 11 S&P sectors. The energy sector emerged as the top performer with a 2.5% surge in crude oil. Activision jumped by 10% following a court ruling allowing Microsoft to proceed with its acquisition of the game developer. China's aggregate financing rose to RMB3,220 billion in June, surpassing expectations and driven by a significant increase in new RMB loans. Today, the US CPI inflation data is set to release, with forecasts indicating a slowdown to 3.1% Y/Y from May's 4.0% but a slight pickup to 0.3% M/M from 0.1%.


What’s happening in markets?

US equities (US500.I and USNAS100.I): energy sector surges, Activision jumped 10%

The S&P500 gained 0.7% and Nasdaq 100 climbed 0.5%. The modest gains spread across all 11 S&P sectors. The energy sector was the top winner as crude oil surged 2.5%. APA Corp (APA:xnys) jumped 6.3%. Activision (ATVI:xnas) soared by 10% after a federal judge ruled that Microsoft (MSFT:xnas) can proceed with its USD75 billion acquisition of the game developer. Microsoft (MSFC:xnas) trimmed initial losses to finish the day 0.2% higher. Meanwhile, the US Federal Trade Commission is reportedly leaning toward appealing the decision.

Treasuries (TLT:xnas, IEF:xnas, SHY:xnas): mixed and choppy trading ahead of CPI release

Treasuries fluctuated between small gains and losses in a thin but choppy trading session on Tuesday ahead of the PI release today. The USD 40 billion 3-year note auction saw strong demand, with a bid-to-cover ratio of 2.88 versus 2.70 in the previous auction. The 2-year yield rose 2bps to 4.87% while the 10-year yield shed 2bps to 3.97%, bringing the 2-10-year yield curve 4bps flatter to -90bps.

Hong Kong & Chinese equities (HK50.I & 02846:xhkg): markets rally as China extends financial supports to property developers

Hong Kong and Chinese equities rallied for a second day following the joint announcement by the People's Bank of China and the National Financial Regulatory Administration. The 16-point financial measures to support the property sector were extended by one year until December 2024. Banks were also instructed to extend outstanding loans to developers beyond their original maturities. The Hang Seng Index gained 1.0%, while the CSI300 Index added 0.7%.

EV makers notably outperformed, with Nio (09866:xhkg) soaring by 11.8% and XPeng (09868:xhkg) advancing by 8.9%. as June EV sales in China increased 35.2% Y/Y.

Shares of casino operators surged after Macao International Airport reported passenger volume in June reached a new high for this year and recovered to 55.3% of the level in June 2019. MGM China (02282:xhkg) jumped 5.2% while Melco (00200:xhkg), Wynn Macau (01128:xhkg), and Galaxy (00027:xhkg) advanced over 4%.

In the A-share market, semiconductors, automakers and their supply led the advance of the market. Noteworthy gains were also seen in the electronic, mechanical equipment, and communication space. Northbound flows saw a net buying of over RMB 3 billion.

FX: USDJPY slides below 140 mark as traders trim short Yen positions

USDJPY declined 0.7% overnight and an additional 0.4% this morning during early Asian hour trading, dropping below the 140 level to 139.80. Traders are said to be reducing their short Yen positions due to renewed speculation of a potential policy adjustment by the Bank of Japan and in anticipation of a moderation in US inflation, as indicated by the upcoming US CPI report.

USDCNH weakened by approximately 0.4% to 7.2025, as the yuan received support from stronger-than-expected credit data in China for the month of June.

Crude oil surges 2.5%

NYMEX WTI crude oil futures (CLQ3) rose by 2.5% to USD74.83 per barrel as vessel tracking data showed signs of decline in Russian oil exports.

What to consider?

US CPI expected to decelerate

US CPI is scheduled to release today. The median forecasts in Bloomberg’s survey of economists point to a slowing of the CPI inflation in June to 3.1% Y/Y from 4.0% in May but a pick-up to 0.3% M/M from 0.1%. As prices of used vehicles, lodging, and airfares have softened in June, the median forecast for core CPI is a fall to 5.0% Y/Y and 0.3% M/M in June from 5.3% and 0.4% respectively in May. This data point probably will not change the Fed’s well-communicated intention to resume hiking at the July FOMC meeting. However, if the core CPI decelerates as anticipated, investors may continue to keep the odds for September and November rate hikes low.

China's June loan growth steady at 11.3% Y/Y

China’s new aggregate financing increased to RMB3,220 billion in June, up from RMB1,556 billion in May and higher than the RMB3,100 billion median forecast. The strong performance was primarily driven by a steep increase in new RMB loans to RMB3,50 billion in June above the median forecast of RMB2,319 billion and RMB 1,363 billion in May. The growth of the outstanding stock of aggregate financing slowed to 9.0% Y/Y in June, down from 9.5% in May mainly due to a high base in government bond issuance last year when local governments were told by the central government to front-load bond issuance. The growth of outstanding RMB loans slid modestly to 11.3% Y/Y from 11.4% in May.

New loans to the corporate sector rose to RMB2,280 billion in June from RMB856 billion in May and slightly above RMB2,212bn last June. New loans to households increased to RMB964 billion in June from RMB367 billion in May and RMB848 billion in June last year. Meanwhile, M2 money supply growth slowed to 11.3% Y/Y in June, compared to 11.6% in May.

UK unemployment rate rises but average earnings growth surpasses expectations

In the UK, the unemployment rate unexpectedly rose to 4.0% in May, compared to 3.8% in April and the median forecast of 3.8%. On the other hand, the growth in average weekly earnings increased to 6.9% Y/Y in May, up from 6.7% in April (revised up from 6.7%), surpassing the expected 6.8%.

Reserve Bank of New Zealand set to hold rates unchanged

The Reserve Bank of New Zealand (RBNZ) is holding a policy meeting on Wednesday. Market participants are expecting the RBNZ to stay put, leaving its policy rates unchanged. Back in May when the RBNZ’s Monetary Policy Committee met and raised the policy rate by 25bps to 5.5%, the voting result was 5-2 with two dissenting votes in favor of a pause. The subsequent communication from the RBNZ indicated a terminal rate of 5.5%.

China's new energy vehicle sales surge 35.2% Y/Y in June

According to the China Association of Automobile Manufacturers, vehicle sales in June reached 2.6 million units, rising 4.8% Y/Y. For the first six months of the year, vehicle sales totaled 13.2 million units, increasing 9.8% Y/Y. In June, the sales of new energy vehicles (NEV) reached 806,000 units, marking a 35.2% Y/Y increase. The market share of NEV relative to the overall passenger vehicle market reached 30.7%. In the first half of this year, cumulative sales of NEV amounted to 3.747 million units, increasing 44.1% Y/Y and reaching a market share of 28.3%. Although the growth rate has slowed down compared to previous periods, it remains significantly higher than the overall growth rate of the passenger vehicle market.

Macao airport reports strong passenger growth

Macao International Airport reported second-quarter passenger volume of 1.197 million, up 58.12% from the previous quarter and reaching 50.2% of the pre-pandemic 2019's second-quarter levels. Despite traditionally being a slower season, monthly passenger volume in June reached a new high for this year, standing at 431,000 individuals and recovering to 55.3% of the corresponding period in 2019.

 

For a detailed look at what to watch in markets this week – read our Saxo Spotlight.

For a global look at markets – tune into our Podcast.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article
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.