Global Market Quick Take: Asia – December 10, 2024

Key points: 

• Macro: China’s Politburo shifts monetary policy stance to “moderately loose” 
• Equities: Nvidia fell due to a Chinese antitrust probe; Oracle fell 7% after earnings miss 
• FX: AUD and NZD jumped on China stimulus, RBA on tap 
• Commodities: Copper rose above $4.2, boosted by China's economic support signals 
• Fixed income: US 10-year Treasury yield near seven-week lows 

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Disclaimer: Past performance does not indicate future performance. 

 Macro:

• China’s inflation data disappointed again, with CPI coming in at 0.2% YoY for November vs. 0.5% expected and PPI at -2.5% YoY vs. -2.8% expected. However, the numbers were overshadowed by earlier-than-expected Politburo announcement of more economic stimulus, including shift in monetary policy stance to “moderately loose” for the first time since 2011. A similar shift during the GFC delivered ~200bps of rate cuts, but policy detail was still scant. 
• The NY Fed survey of inflation expectations rose modestly across the forward calendar: the year-ahead rose to 3.0% from 2.9%, three-year-ahead to 2.6% from 2.5% prior, and five-year-ahead to 2.9% from 2.8%. 
• On tap today: The Reserve Bank of Australia decision is due and it is likely to stand pat, but the Governor may be questioned for growth disappointment last week and markets will be eyeing how soon a policy pivot can be expected.  

Equities:  

• US - US stocks declined as Nvidia shares fell due to a Chinese antitrust probe and caution ahead of an inflation report. The S&P 500 and Nasdaq 100 dropped 0.6%, and the Dow Jones fell 0.5%. Nvidia lost 2.5%, Meta decreased 1.6%, and Apple gained 1.6% to a record close. Super Micro Computer rose 0.5% after a Nasdaq filing extension.
• Oracle shares dropped 7% after missing Q2 expectations. Earnings per share were $1.47 versus $1.48 expected, and revenue was $14.06 billion against $14.1 billion forecasted. Cloud services revenue rose 12% to $10.81 billion, with cloud infrastructure revenue up 52% to $2.4 billion. Oracle signed a deal with Meta for AI infrastructure projects.
• China - HSI rose 2.8% after China's Politburo announced proactive fiscal and loose monetary policies. China plan measures to counter the slowdown, with leaders preparing for the Central Economic Work Conference.
• Earnings - Gamestop

FX: 

• The US dollar was mixed but AUD and NZD led the gains on the back of increased Chinese stimulus measures helping the risk on flows for those countries currencies. AUDUSD broke back above 0.64 handle to highs of 0.6471 and RBA announcement is on tap today.
• Japanese yen underperformed, and USDJPY rose back above 151 on the back of higher US yields despite the Fed still expected to cut rates next week.
• Chinese yuan strengthened on the back of stimulus announcements, with USDCNH pushing back below 7.27, but depreciation pressures are likely to remain amid easy policy and tariff risks. 
• USDCAD also in focus as Bank of Canada meets on Wednesday and there is 84% odds of a 50bps rate cut. USDCAD back above 1.4170 eying Novembers over 4-year high of 1.4178.

Commodities:  

• WTI crude oil rose above $68, driven by China's shift to looser monetary policy and Middle East tensions. China's new policy aims to boost growth, while reports of Syrian President Assad's ouster added market support.
• Gold surpassed $2,660 due to safe-haven demand amid Middle East tensions and renewed Chinese purchases. Silver rose 3.3% to above $31.80.
• Copper futures rose to over $4.2 per pound, a one-month high, driven by China's signals of large-scale economic support, boosting manufacturing demand prospects.

Fixed income:  

• The US 10-year Treasury yield was at 4.18%, near seven-week lows, as investors awaited inflation data. Despite strong job growth and better consumer confidence, markets expect a 25 basis point Fed rate cut, with an 83% probability.
• Japan's 10-year government bond yield dropped below 1.04%, a near one-month low, amid uncertainty about the timing of the next Bank of Japan rate hike.

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