Global Market Quick Take: Asia – February 05, 2025

Key points:

• Macro: JOLTS weaker than expected and Beijing retaliates against US tariffs
• Equities: Palantir rises 24%, pushing Nasdaq 100 gains to 1.2%
• FX: CAD strengthened to 1.43 against USD due to tariff delays
• Commodities: WTI, Gold and Copper rise across the board
• Fixed income: Treasuries broadly increased, with yields falling across the curve

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Disclaimer: Past performance does not indicate future performance.

Macro:

• US JOLTS Job Openings (Dec) came in weaker than expected at 7.6M vs. Exp. 8.0M (Prev. 8.098M)
• Caixin reported growth in Chinese factory activity, easing concerns from a contraction in the NBS PMI due to inventory fluctuations. Despite this, copper smelter charges indicated uncertain future purchasing. Beijing's planned fiscal stimulus, alongside rising credit demand, raised hopes for stronger factory goods demand.
• The additional 10% US tariffs on Chinese imports took effect yesterday, prompting an immediate retaliatory response from Beijing, but markets remain cautiously optimistic that further escalation could be avoided.
• Trump has suggested that the US take over the Gaza Strip to develop it economically after Palestinians are resettled elsewhere after a visit with Israeli Prime Minister Benjamin Netanyahu.

Equities: 

• US - S&P 500 rose 0.7%, driven by energy stocks, while the Nasdaq climbed 1.2%, bolstered by a 24% rise in Palantir and a 1.3% increase in Nvidia. The Dow Jones gained 133 points. Alphabet fell 7% after cloud revenue missed estimates and forecasting capex at $75b, above street estimates of $59b. PepsiCo (-4.5%) and Merck (-8.8%) fell after disappointing forecasts while Estee Lauder (-16.2%) fell due to weak demand and job cuts. AMD fell 8.7% in post market despite reporting better than expected revenue and profit but missed data centre revenue expectations.
• China- Markets reopen today after a one-week break. Hang Seng Index reopened on Monday and have gained 2.8% driven by tech names.
• Earnings this week: Ford, Qualcomm, Arm Holdings, Eli Lilly, Roblox, Peloton, Amazon, Pinterest, Disney, Microstrategy, Uber, Novo Nordisk

FX:

• Dollar Index dropped from 109.040 to 107.930 amid a month's delay in Mexico and Canada tariffs, while China tariffs stayed with limited retaliation. US tariffs on Canada were delayed after a Trump-Trudeau call.
• CAD outperformed on tariff delays, with USDCAD dropping to 1.4303. JPY and GBP gained against USD. BoJ Governor Ueda reiterated a 2% inflation goal. The BoE is expected to cut the Base Rate by 25bps.
• MXN stayed firm at 20.36 against USD as Trump's tariff delay eased disruption fears and reduced US dollar demand. Mexico's troop deployment to the northern border aims to prevent US tariffs, but threats still limit peso gains.
• Major economic data: China Caixin data, Canada Balance of Trade, US ISM service data

Commodities:

• WTI crude oil futures bounced back to just under $73 per barrel from a low of $70.65, driven by expectations of tighter U.S. sanctions on Iran as President Trump aims to halt its oil exports.
• Gold surged past $2,840 per ounce, a new record, amid worries that global tariffs will impede growth, boosting demand for safe-haven assets.
• Copper futures climbed above $4.3 per pound, a two-week high, supported by growth in major manufacturing sectors and the first U.S. factory expansion in over two years, as reported by the ISM, despite ongoing U.S.-China trade tensions.

Fixed income:

• Treasuries recorded widespread gains, with yields declining by 4 to 5 basis points across the curve in the late session. This was triggered by a December JOLTS job openings report that fell short of expectations. 10-year yields were trading near the day's lows at around 4.51%. The broad gains across the curve kept spreads within one basis point of Monday's close, as the initial steepening observed in the 2s10s and 5s30s gradually reversed as the US session progressed.

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