Global Market Quick Take: Asia – January 3, 2024

US Equities: Profit taking, higher Treasury yields, an analyst downgrade of Apple, and a cautious analyst note on Nvidia saw the Nasdaq 100 plunge 1.7% to finish the first trading day of 2024 at 16,544. The S&P 500 dropped by 0.6% to 4,743. An analyst report from a global investment bank downgraded Apple to underweight from equal weight. The bank also lowered the price target to $160 from $161, below the current market, attributing it to findings from the analysts’ channel check that show softness on volumes and product mix. Apple’s shares fell 3.6%. Nvidia dropped by 2.7% after a US investment bank cautioned investors about the disillusionment of the "AI hype" and assigned a below-market $410 price target to the AI chip maker. Meanwhile, Moderna surged 13.1% on an analyst upgrade and upbeat comments on 2025 sales growth from the drugmaker’s CEO.

Fixed income: Treasury yields surged across the curve as traders reassessed the anticipated amount of Fed rate cuts and considered the potential impact on liquidity due to ongoing quantitative tightening and the decline in reverse repo balances at the Fed. The 2-year yield jumped by 7 bps to 4.32%, and the 10-year yield increased by 5 bps to 3.93%. Today's focus will be on the JOLTS job openings data, with attention then shifting to the job report scheduled for release on Friday.

China/HK Equities: The Hang Seng Index and the CSI300 plummeted 1.5% and 1.3% respectively as investors returned from the New Year holiday. This reaction came in response to China's official NBS PMI data released over the weekend, which indicated that both the manufacturing and service sectors in the country remain in contraction. Despite the private Caixin China manufacturing PMI showing a slight increase from 50.7 in November to 50.8 in December, this did not alleviate the prevailing pessimism among investors. Chinese developer stocks declined as sales of the top 35 listed developers dropping by 46% Y/Y or showing a marginal 1% M/M increase in December. Macao casino stocks defied the overall market weakness and gained amid strong gross gaming revenue growth in late December.

FX: The dollar rallied against major currencies as Treasury yields rose, resulting in the DXY gaining 0.9%. USDJPY rebounded by 0.8% to 142.00. EURUSD dropped by 0.9% to 1.0942, and AUDUSD slid 0.8% to 0.6761. Traders are unwinding some of their dollar shorts ahead of key US labor market statistics this week, particularly the non-farm payrolls and unemployment rate to be released this Friday.

Commodities: Crude oil initially gained on tensions in the Red Sea during the first trading session of the year but later retreated to close lower. WTI crude and Brent crude oil both fell, declining by 1.8% and 1.2%, respectively, dragged down by a rally in the dollar.

Macro:

• The final reading of the US S&P manufacturing PMI came in at 47.9%, down from the previously reported flash reading of 48.2.
• The private survey of Caixin China manufacturing PMI picked up to 50.8 in December from 50.7 in November, better than 50.3 expected.
• The People’s Bank of China injected RMB350 billion low-cost funds to targeted projects in the economy in December via policy banks through its Pledged Supplemental Lending programme.

Macro events:  US ISM manufacturing (Dec), US JOLTS job openings (Nov), US Wards total vehicle sales (Dec), US FOMC minutes (Dec), Germany unemployment change (Dec), Japan markets are  closed for holiday.

In the news:

• China’s BYD overtakes Tesla as world’s largest maker of pure-electric vehicles on fourth-quarter EV sales surge (SCMP)
• China removed an official at a government body overseeing its press and publications regulator, days after Chinese gaming stocks were hit by proposed rules to curb spending on video games (Reuters)
• EV maker Rivian's quarterly deliveries miss expectations, shares tank (Reuters)
• OPEC+ Plans Oil Market Monitoring Meeting in Early February After Fresh Output Cuts Start (Bloomberg)

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

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