Global Market Quick Take: Asia – May 24, 2024 Global Market Quick Take: Asia – May 24, 2024 Global Market Quick Take: Asia – May 24, 2024

Global Market Quick Take: Asia – May 24, 2024

Macro 6 minutes to read
APAC Research

Key points:

  • Equities: Semiconductor index hit record high
  • FX: Broad based US dollar strength
  • Commodities: Gold decline continues
  • Fixed income: 10-year yield near 4.5%
  • Economic data: US April Preliminary Durable goods orders

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

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

QT24

Equities: U.S. stock markets kicked off the trading session with the S&P 500 and the Nasdaq hitting new intraday highs, primarily propelled by Nvidia's impressive earnings report, which surpassed market forecasts and uplifted the tech industry. This surge took the Nasdaq to the brink of 17,000, while the SOX index reached an all-time high of 5,255.63. The initial upswing, however, didn’t last as investors began cashing in profits after a string of US data showed strong economic momentum (S&P Global PMIs), further delaying the prospect of Fed rate cuts this year. The market is now pricing a possible cut only in November 2024. Following that, the Nasdaq fell to under 16,700, and the S&P 500 dropped below 5,260. The downward trend saw Nvidia's shares pulling back from their highs, as the breadth of the market indicated a shift with S&P 500 declines eclipsing advances. Across the board, every S&P sector experienced notable declines, with sectors like REITs, Utilities, Healthcare, and Financials undergoing pronounced dips, which along with a significant downturn in Boeing's stock price, resulted in a drop of over 600 points for the Dow. Amidst these market movements, after Nvidia's earnings, the wider market sentiment turned cautious with a clear "sell on the news" reaction that dented the overall performance for May. This cautious tone was mirrored in small-cap stocks as the Russell 2000 significantly lagged. Comments from market analysts like Jeff Gundlach, alerting about recession probabilities and growing U.S. debt burdens, added to the wary outlook.

FX: The US dollar continued its upward trend for the fourth day in a row, bolstered by higher Treasury yields in response to a report indicating a faster-than-expected expansion in the US economy and increasing price measures. The Bloomberg Dollar Spot Index initially declined by 0.2% before rebounding to a 0.2% increase, and the dollar gained ground against most G-10 peers during midday trading due to model purchases. The euro experienced a 0.2% decline to 1.0806 against the dollar, with its losses initially tempered by higher European bond yields. The USDJPY pair climbed by up to 0.3% to 157.20, marking a three-week high before moderating its gains. The pound decreased by 0.2% to 1.2687 as a result of reduced long positions following US PMI data and a UK composite PMI that fell short of expectations. Despite a decrease in oil prices, the Norwegian krone advanced against other G-10 and commodity currencies, while the Kiwi, Aussie, and the Loonie saw minimal movement during the session.

Commodities: Gold fell more than 2% to $2,329 an ounce and Silver declined 2.13% to $30.13 an ounce. The decline was attributed to a rebound in the dollar and Treasury yields, as well as profit taking following a recent surge in commodity prices. The release of minutes from the prior FOMC meeting, indicating that interest rates would remain elevated for an extended period, further contributed to the downward pressure on gold prices. Despite the recent pullback, gold prices are still up approximately 14% year-to-date. Meanwhile, Bitcoin prices dipped by 2% to just below $68,000, and oil prices also retreated, with WTI crude dropped 0.9% to $76.87 per barrel and Brent Crude futures fell 0.66% to $81.36 per barrel. Concerns over the potential impact of higher U.S. interest rates on demand growth added to the market unease surrounding commodity prices. Cocoa futures rallied by 10.8% and Natural gas slipped by 6.4%.

Fixed income: Treasury bond futures are on track for their largest weekly decline in five weeks, as robust US economic data prompts traders to scale back their expectations for a Federal Reserve interest rate cut. Market attention is focused on bond auctions in Japan and Australia. On Thursday, the Treasury 10-year note yield increased by 6 basis points to 4.48% following the release of a composite PMI for US manufacturing and services that exceeded economists' forecasts, while the 2-year yield climbed by six basis points to 4.93%. Overnight indexed swap (OIS) prices indicate the likelihood of a 25 basis point Fed rate cut in December. German 2-year yields rose by eight basis points after German PMI data surpassed analyst expectations. Japanese 10-year bond futures concluded the overnight session with a 16-tick decline at 143.57, and the benchmark yield decreased by 0.5 basis points to 0.995% on Thursday. Meanwhile, the yield on Australia's 3-year note advanced by 5 basis points to 3.98%, and the yield on 10-year debt rose by 5 basis points to 4.31%.

Macro:

  • In April, new home sales dropped by 4.7% to an annual rate of 634,000, falling below the consensus estimate of 678,000. Sales in the Northeast plummeted by 20.9%, while the Midwest saw a 10.0% increase. The median sale price for April was $433,500.
  • Weekly jobless claims decreased to 215,000 from 223,000 the previous week, below the consensus of 220,000. However, the 4-week moving average rose to 219,750.
  • S&P Global's May flash composite PMI and services PMI both showed significant improvement compared to April, while the manufacturing PMI also increased.
  • Mortgage rates declined for the third consecutive week, with the 30-year rate dropping below 7% for the first time in over a month, averaging 6.94% as of May 23.

Macro events: Malaysia April CPI, Singapore April Industrial Output, Japan April Dept. Store Sales, Japan April CPI, UK April Retail sales, Germany 1Q Final GDPx, Canada March retail sales, US April Durable goods orders, US May University of Michigan consumer sentiment index

Earnings: MayBank, Booz Allen, Buckle, Sunlands Tech

News:

  • Xiaomi’s sales grow fastest in two years on smartphone recovery (BT)
  • US SEC approves exchange applications to list spot ether ETFs (Reuters)
  • Oil flat as firming US gasoline demand offsets rate jitters (Reuters)
  • Here’s where the last $6 billion in CHIPS Act semiconductor award money is going (CNBC)
  • The Real Reason Nvidia Hiked Its Dividend 150% (MarketWatch)

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.