Global Market Quick Take: Asia – December 28, 2023

Macro 5 minutes to read
Redmond Wong

Chief China Strategist

Summary:  US Treasuries rallied, with the 10-year yield dropping by 10 bps to settle at 3.79%. The S&P 500 inched up 0.1%, approaching its record close of 4,797 from January 2022. The Hang Seng Index rebounded 1.7% to 16,625, driven by the recovery of online and mobile gaming stocks and the advancement of EV stocks. USDJPY extended losses amid falling US Treasury yields, the BoJ's lower limit for bonds, and Japan's stronger-than-expected retail sales and industrial production. Crude oil retreated, but copper and gold experienced gains.


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

US Equities: The S&P 500 edged up 0.1% to 4,782, propelling toward its record close of 4,797 in January 2022. Among the 11 S&P 500 sectors, healthcare, real estate, and consumer staples outperformed. Meanwhile, energy stocks declined as crude oil retreated. The Nasdaq 100 gained 0.2%, finishing at 16,907. The New York Times rose 2.9% after the publishing company filed a copyright infringement lawsuit against Microsoft and OpenAI. Tesla added 1.9% based on an analyst report suggesting strong delivery and price stabilization.

Fixed income: Treasuries rallied steadily throughout the Wednesday session in New York, with the 10-year yield dropping by 10 bps to settle at 3.79%, the lowest level since July. The auction of $58 billion 5-year notes met robust demand and was awarded at 3.801%, which was lower than the 3.815% traded at the auction deadline. The bid-to-cover ratio was 2.50 times, up from 2.46 times in the previous auction.

China/HK Equities: After a softer tone from the regulators and approval of a batch of new domestic games, online and mobile gaming stocks rallied. NetEase surged 11.9%, Bilibili rose 6.7%, and Tencent gained 4.0%. Nio soared 12.2% after the EV maker unveiled an executive sedan with a starting price of RMB800k. The rise in China’s industrial profits by 29.5% Y/Y in November helped lift sentiment. The Hang Seng Index rebounded 1.7% to 16,625. In the mainland, CSI300 rose 0.4%, led by computing, financials, and farming. Market chatters speculated if Central Huijin, an investment arm of the Chinese government, was once again increasing its stake in the four largest Chinese banks.

FX: DXY, the dollar index fell by 0.5% as both EURUSD and GBPUSD rose by 0.6% against the greenback. USDJPY extended its losses due to a combination of falling US Treasury yields, the BoJ setting a lower limit for some bonds in its bond-buying operation in Q1 2024, and stronger-than-expected retail sales and industrial production in Japan. USDJPY dropped to 141.30 in early Asian trading on Thursday.

Commodities: Crude oil consolidated its recent rally and retreated, with WTI crude falling by 1.9% to $74.1 and Brent crude dropping 2.1% to $79.3. Shipping companies are resuming transit through the Red Sea after a temporary suspension prompted by militia attacks on vessels. A US-led multinational operation is patrolling the Red Sea with the aim of safeguarding commercial shipping. According to data from the American Petroleum Institute, US crude inventories increased by 1.837 million barrels last week. Meanwhile, copper rose by 1.5% to $3.96 per pound, and gold extended gains by 0.5% to $2,077.

Macro:

  • Japan’s retail sales increased by 5.3% Y/Y in November, surpassing 5.0% forecasted and up from 4.1% (revised) in October. On month-on-month basis, retail sales increased by 1% versus 0.5% expected and -1.7% in the prior month. Industrial production also came in better than expected, showing a smaller decline of -1.4% Y/Y in November versus -2.1% expected but weaker than the +1.1% Y/Y in October.
  • The US Richmond Fed Manufacturing Index came in at -11 in December, which is softer than the expected -3 and down from -5 in November.
  • China’s industrial production increased by 29.5% Y/Y in November, accelerating from the 2.7% Y/Y in October. This marks the fourth consecutive month of year-on-year growth.
  • China’s Emerging Industries PMI declined to 49.8 in December from 54.7 in November.
  • According to Wind, new home sales in 21 major Chinese cities during the period from Dec 1 to 26 declined by 39.7% from the pre-COVID level in 2019.

Macro events:  US Jobless Claims, US Pending Home Sales, US Wholesale Inventories, Japan Industrial Production (Nov), Japan Retail Sales (Nov).

In the news:

  • Apple Resumes Sale of Watch Models After Appeals Court Lifts Ban (Bloomberg)
  • Oil drops almost 2% as investors monitored developments in the Red Sea, where shippers are returning despite further attacks (Reuters)
  • NY Times sues OpenAI, Microsoft for infringing copyrighted works (Reuters)
  • Year-End Money-Markets Angst on Fed Exit Echoes 2018 Crunch (Bloomberg)
  • Trump can remain on Michigan primary ballot, state supreme court rules (Politico)

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

For a global look at markets – go to Inspiration.

 

Quarterly Outlook

01 /

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...

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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/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 Markets 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 Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

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 such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website 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 intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.