US Equities: In a quiet session preceding the CPI on Tuesday and retail sales on Wednesday, the S&P 500 edged down by 0.1% and the Nasdaq 100 slid by 0.3%. Boeing surged by 4% after a 95-aircraft order from Emirates Airline, along with a Bloomberg story suggesting that China may announce a resumption of the purchase of 737 Max jetliners when Xi and Biden meet on Wednesday.
Fixed income: Treasury yields fell by 1-3bps across the curve in a low-volume session. Some initial weaknesses emerged ahead of the estimated $30 billion corporate bond issuance this week. The market reversed later in the day following declines in the 1-year and 5-year inflation expectations in the New York Fed’s survey of consumer expectations, and traders adjusted positions before the CPI release on Tuesday. The 2-year yield dropped by 3bps to 5.03% and the 10-year yield shed 1bp to 4.64%.
China/HK Equities: After a lackluster morning session, stocks rallied into the close, with the Hang Seng Index gaining 1.3%, and the Hang Seng Tech Index surging 2.3%. Headlines suggesting conciliatory stances on both sides ahead of the Xi-Biden meeting on Wednesday somewhat contributed to an improvement in market sentiment. Industrial and healthcare stocks outperformed, and Internet names also rallied ahead of earnings from Meituan on Tuesday, Tencent on Wednesday, Alibaba, and JD.COM on Thursday. Over the weekend, Alibaba and JD.COM reported positive year-over-year growth in their gross merchandise value (GMV) during the three-week Singles Day promotion period, although specific details were not provided. China’s State Post Bureau stated that parcel volume grew 23% year-over-year from November 1 to 11. However, Syntun, a database tracking retail sales in China, indicated that e-commerce sales (in value) grew only 2% year-over-year during the Singles Day promotion period. In mainland bourses, the CSI300 slid 0.2%.
FX: The dollar index traded a notch softer with the slippage in Treasury yields. Despite that, Japanese yen weakened again, taking USDJPY in close sight to 152 but suspected intervention saw the pair drop to 151.20 before returning to trade around 151.60 subsequently. Japan’s top currency diplomat Kanda was forced to resign yesterday for non-payment of taxes, which could mean speculators may test further upside. AUDUSD rose back towards 0.64 amid hawkish leaning RBA commentary while GBPUSD is testing the upside break of 1.2280 amid PM Sunak's latest Cabinet reshuffle and UK’s wage data will be on watch today. Kiwi underperformed taking AUDNZD to 1.0850.
Commodities: Crude oil prices rebounded after a sharp selloff in the last week on erasing the war premium and increasing demand concerns. However, OPEC on Monday raised its oil demand forecast saying the oil market fundamentals remain strong and blaming speculators for the recent drop in crude prices. In its monthly oil market report for November, OPEC slightly revised upwards its forecast for world oil demand growth in 2023 to 2.46 million barrels per day (bpd), up 20,000 bpd from last month's estimate. It said China’s crude oil imports are very healthy and Asian refining margins are strong. Meanwhile, Copper jumped despite China’s credit data remaining modest and focus now turns to US CPI data today for the commodity complex.
- The New York Fed’s survey of consumer expectations showed 1yr ahead inflation expectations reading slip from 3.67% to 3.57% (back close to its cycle low of 3.55% recorded in July). The 3yr remained unchanged at 3.0%, and the 5yr fall to 2.7% from 2.8%, paring some of the inflationary concerns from the University of Michigan's survey. October inflation print due today will be in focus.
- China's new aggregate financing declined to RMB 1,850 billion in October from RMB 4,122.7 billion the previous month, slightly below the median forecast of RMB 1,950 billion. This brings the growth of outstanding aggregate financing to 9.3% in October from 9.0% in September. The key driver for the growth was the issuance of local government bonds. New RMB loans fell to RMB 738 billion in October from RMB 2,310 billion in September.
Macro events: IEA OMR; UK Average Earnings/Unemployment (Oct/Sep), German ZEW (Nov), US NFIB (Oct), US CPI (Oct), Japan GDP (Q3)
Earnings: Home Depot, Meituan, Hon Hai Precision, Delivery Hero, Vodafone, Mitsubishi UFJ, Summitomo Mitsui, Nu Holdings, Sea
In the news:
- India Weighs Five-Year Tax Cuts on EV Imports to Woo Tesla (Bloomberg)
- US retailers stuck with excess stock offer bargains as holiday season nears (Reuters)
- Cameron returns as UK foreign secretary after Braverman sacked (FT)
- Commonwealth Bank Profit Flat Due to Competition for Deposits (Bloomberg)
- Walmart, Target earnings to offer clues on crucial holiday season (Reuters)
- A possible downgrade of Italy to junk this week would be hugely symbolic, potentially consequential (Bloomberg)
- Germany set to double Ukraine military aid, lifting Germany's defence spending to 2.1% of its GDP (Reuters)
For all macro, earnings, and dividend events check Saxo’s calendar.
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