Global Market Quick Take: Asia – February 13, 2025

Key points:

• Macro: US Core CPI rose 0.446%, above the 0.3% forecast
• Equities: US stocks fell after hot CPI; HSI rose 2.7% on AI-driven enthusiasm
• FX: JPY weakened as USDJPY rose above 154 after CPI report
• Commodities: Oil prices fell, ending a three-day rally
• Fixed income: Treasuries drop after strong CPI report

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Core CPI rose 0.446%, above the 0.3% forecast, with the annual rate at 3.3%. US headline CPI rose by 0.467% in January, exceeding the 0.3% consensus and accelerating from December's 0.393%. The annual rate increased to 3.0%, surpassing the expected 2.9%. Shelter costs rose 0.4%, contributing significantly to the overall increase. Energy prices climbed 1.1%, with gasoline up 1.8%, while food prices increased 0.4%, driven by a notable rise in egg prices.
• Fed Chair Powell, in his House testimony, emphasized that the Fed bases decisions on economic conditions and is cautious about tariff impacts until policies are clear. He noted ample reserves and the need to maintain restrictive policy due to insufficient progress on core inflation. Powell highlighted that PCE inflation is a better measure, with more data expected soon.
• President Trump said that interest rates should be lowered and that would go "hand in hand" with his upcoming tariffs, despite economists' concerns that tariffs could increase inflation and delay rate cuts.

Equities: 

• US - US stocks mostly fell on Wednesday after January's CPI data exceeded expectations, fuelling inflation concerns amid rising Treasury yields. The S&P 500 dropped 0.3%, the Dow Jones fell 225 points, while the Nasdaq 100 edged up 0.1%. January's CPI rose 0.5%, raising the annual inflation rate to 3%, which may delay Federal Reserve rate cuts and increase speculation of a rate hike. Consumer Discretionary (+0.34%) and Communications (+0.17%) sectors gained, while the other nine sectors fell, with Real Estate (-0.67%) and Energy (-2.07%) as the largest laggards.
• Meta Platforms is on its 18th consecutive day of gains, aiming to maintain this historic streak. The company holds a strong position in the AI race and may consider expanding its AI hardware capabilities.
• Europe – DAX and FTSE 100 closed at record highs. Heineken Holding NV reported strong Q4 2024 results, with significant revenue and profit growth. The stock surged 14.42% to 67.45.
• Hong Kong – HSI rose 2.7% to 21,858, driven by AI enthusiasm and strong mainland market performance. Alibaba surged 8.5% after partnering with Apple for AI features in China, while BYD Electronic jumped 10.1% with its new intelligent driving system. Other gainers included KE Holdings (10.2%), Geely Auto (6.5%), Semiconductor Manufacturing (6.0%), and Lenovo Group (5.4%).

Earnings this week:

• Thursday: Datadog, John Deere, Coinbase, Twilio, DraftKings
• Friday: Moderna, Enbridge, Magna International, Portland General Electric, Fortis

FX:

• USD initially rose on higher-than-expected CPI data but later pared gains as CAD, CHF, and GBP stabilized, and the Euro recovered. Geopolitical updates were positive with Trump speaking to Putin and Zelensky, while US-Iran tensions persist. Powell reiterated inflation concerns. Trump plans to announce tariffs before PM Modi's visit.
• EUR rallied with strong European equity demand, buoyed by positive EZ data and lower US valuations, and was further supported by Trump-Putin talks on Ukraine/Russia, lifting EURUSD above its 21 DMA of 1.0381.
• JPY weakened due to the widening rate gap between USTs and JGBs, with USDJPY rising above 154 following the CPI report. Key resistance levels are at the 21 DMA of 154.56 and 50 DMA of 155.25. BoJ's Ueda noted inflation's negative impact on households.
• The BoC minutes had little effect on CAD, as members supported January's 25bps rate cut for growth. GBP remained unchanged, with BoE's Green's comments having minimal impact. The UK's GDP Prelim (Q4) is the next major event for the Pound.
• Major economic data: GB GDP, US PPI, EU Economic Bulletin, EU Industrial Production

Commodities:

• Oil prices fell after a conversation between US President Trump and Russian President Putin led to speculation that regional crude supply risks might diminish. A potential Russia-Ukraine ceasefire raises questions about the future of US sanctions, potentially impacting Russian crude flows.
• Gold climbed above $2,900 an ounce following higher-than-expected US price reports, leading traders to anticipate a rate cut by December. Investors are watching Fed Chair Powell's remarks about gradual interest rate decisions. Gold has surged this year, nearing $3,000 an ounce, with bullion-backed ETFs up over 1%.

Fixed income:

• Treasuries fell sharply in the US morning after January's CPI exceeded expectations for both headline and core metrics, with losses persisting until the close. Weak demand at the 10-year note auction pushed yields near the day's highs, rising 8 to 11 basis points across the curve, led by the mid-section. Fed-dated OIS adjusted to price in one 25 basis point rate cut by year-end. The 10-year yield was around 4.635%, its highest since January 24, as the mid-section led the selloff, widening the 2s5s30s fly by 6 basis points from Tuesday's close.

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