Global Market Quick Take: Asia – September 13, 2023

US Equities: Investors were not impressed by the iPhone 15 and Apple Watch Series 9 unveiled on Tuesday, seeing the shares of Apple drop by 1.8%. The Apple decline weighed on the Nasdaq 100 which slid 1.1%. Adding to the selling was a 4% decline in Adobe ahead of reporting on Thursday. Another focus in the tech space was Oracle, which plummeted 13.5% on weak cloud sales. The S&P500 shed 0.6%.

Fixed income: The curve flattened as the 2-year yield rose 3bps to 5.02% while the 10-year yield slid 1bp to 4.28%. The short end was under some pressure ahead of today’s CPI data while the long ends held firm and absorbed the USD35 billion 10-year auction and around USD20 billion corporate bond issuance well.

China/HK Equities: The Hang Seng Index ended a lackluster session with a thin trading volume session, down 0.4%. Energy and pharmaceutical names weighed on the benchmark. The Hang Seng Tech Index shed 0.5% as gains in Xiaomi and EV makers were offset by losses in Internet stocks.

FX: Higher crude oil prices made CAD the G-10 outperformer with USDCAD down to 1.3550 from 1.3590 but EUR attempted to catch up in late NY/early Asian hours on ECB leak that inflation forecasts may be raised higher which are seen to be raising the prospect of a hike this week. EURUSD jumped higher to 1.0760 with EURGBP above the 0.86 hurdle as GBPUSD dipped below 1.25 on not-so-hawkish labor market. USDCNH sticking close to 7.30 and AUDUSD around 0.6425.

Commodities: Crude oil prices rallied to fresh 10-month highs after OPEC forecast a significantly tight market. In its latest monthly outlook, the oil group said the market may experience a shortfall of 3.3mb/d in the fourth quarter of the year. This would make it one of the largest deficits in more than a decade. OPEC’s estimate was at odds with EIA’s predicted deficit of 230kb/d, and the IEA’s monthly report will be on watch today. Prices eased from the peaks as API reported a crude inventory build after four straight weekly draws although Cushing hub stockpiles declined, and official data will be reported today. Gold dropped below 200DMA as inflation concerns returned, bringing more fear of rate hikes and US CPI will be on watch today.

Macro:

• Reuters reported that according to an unnamed source the ECB’s new 2024 inflation projection to be above 3% vs 3% in June, firming case for interest rate hike. ECB also to cut 2023 and 2024 economic growth projections to broadly in line with market expectations.
• UK labor report was mixed with headline earnings up 8.5% YoY in July vs. 8.2% expected. Ex-bonuses, and of more significance, the rise was a lesser 7.8% and in-line with expectations. However, payrolls slumped, coming in at -1K for August, with July’s print also revised lower to -4K from +97K earlier. For more, read our Macro/FX Watch.
• German ZEW survey showed a further deterioration in the Current Situation reading, to -79.4 for September from -71.3 – a level last seen during the pandemic – but an unexpected improvement in Expectations, to -11.4 from -12.3, against consensus for a fall to -15.0.
• Japan’s Reuters Tankan disappointed again with manufacturers index at +4 (prev. +12) and non-manufacturers index at +23 (prev. +32). August PPI +0.3% MoM (exp +0.2%) 3.2% YoY (exp 3.3%)

Macro events: US CPI (Aug), US 30-year T-bond auction ($20 billion), UK monthly GDP (Jul), Eurozone industrial production (Jul)

Company Events:

In the news:

• US Senate's Schumer plans to lead a bipartisan congressional delegation to visit China, Japan, South Korea (Reuters).
• Apple’s iPhone 15 Debut Includes Higher Price on Top Model (Bloomberg)

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