Global Market Quick Take: Asia – February 14, 2024 Global Market Quick Take: Asia – February 14, 2024 Global Market Quick Take: Asia – February 14, 2024

Global Market Quick Take: Asia – February 14, 2024

Macro 6 minutes to read
APAC Research

Summary:  The US CPI exceeded expectations, both on the headline and core fronts, disrupting the disinflation narrative. In response, the 2-year Treasury yield surged by 18bps to 4.66%, and the DXY index broke past the 100-day moving average. USDJPY also rallied beyond 150.50, prompting Japanese officials to issue warnings about the move. The S&P 500 Index dropped by 1.4%, and the Nasdaq 100 Index fell by 1.6%. In the first trading session following the Lunar New Year holiday, the Hong Kong equity market is expected to face pressure due to the MSCI announcement regarding the deletion of 66 Chinese companies from the MSCI China Index.


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

US Equities: After the anticipation of a near-term Fed rate cut was further diminished, and bond yields surged following a hot CPI report, stocks had a significant pullback across the board. The S&P 500 Index dropped by 1.4%, with all 11 sectors declining. Moody’s, which plunged 7.9%, was the worst-performing stock within the broad market benchmark index after reporting revenue and earnings below estimates. The Nasdaq 100 Index dropped by 1.6%. Biogen, plunged by 7.4% and was the worst performer within the Nasdaq 100 after guiding a low-to-mid-single-digit percentage revenue decline in 2024. JetBlue, on the other hand, surged by 21.6% following the news that Carl Icahn has built a 9.9% stake in the airline. Cisco is reporting results today.

Fixed income: The 2-year Treasury yield jumped by 18bps to 4.66% after the CPI prints came in stronger than expected, reducing the anticipation of rate cuts in March and May. The 10-year Treasury yield rose by 14bps to 4.31%.

China/HK Equities:In the first trading session following the Lunar New Year holiday, the Hong Kong equity market is expected to face pressure due to the MSCI announcement regarding the deletion of 66 Chinese companies from the MSCI China Index and 76 from the MSCI China All Shares Index. This includes notable names such as China Southern Airlines, Greentown China, Weibo, Ping An Healthcare, and China Everbright Environment. Additionally, there are three deletions from the MSCI Hong Kong Index: Xinyi Glass, Budweiser Brewing, and New World Development. The mainland A-share market will remain closed for the Lunar New Year holiday for the rest of this week. Overnight, the NASDAQ Golden Dragon China Index pulled back 2.7%, reversing the 2.1% gains on Monday.

FX: The dollar surged sharply in response to the hot CPI report overnight, with the DXY index breaking past 100DMA to touch its highest levels in three months when markets started to price in Fed rate cuts. Scandies were the underperformers, while Swiss franc also slid below its 200DMA after Swiss CPI came in softer-than-expected yesterday. USDCHF rose to 0.8880 and next resistance seen at 0.89. USDJPY also rallied past 150.50, and Japanese currency official Kanda was on the wires this morning warning about the move and stoking concerns of intervention. EURUSD tested 1.07 while GBPUSD slid below 1.26 and UK CPI will be on the radar today. To read our weekly FX outlook, go here.

Commodities: Gold slumped below the key $2,000 mark as yields and dollar jumped higher. The precious metal has held above this key psychological level since mid-December on the hope of Fed rate cuts, which are being re-assessed now. Crude oil gained as concerns over demand were soothed by a bullish outlook from OPEC. IEA however hinted at “comfortable” markets this year as increasing production from non-OPEC countries underpins, and inventory data was also mixed, keeping oil range-bound.

Macro:

  • US CPI came in hotter than expected, both on the headline and core, disrupting the disinflation narrative and reaffirming the last mile of the inflation move to 2% could be bumpy. Headline rose 3.1% YoY and 0.3% MoM, vs. 2.9% and 0.2% expected respectively. Core meanwhile was steady at 3.9% YoY vs. 3.7% expected, and rose on a MoM basis to 0.4% from 0.3% previously. Prices of most staples increased, including food, shelter, car insurance were higher. Focus now turns to PPI report on Friday which could help to gauge what Fed’s preferred inflation measure PCE could come at. The hot CPI report has priced out a March rate cut, now seen with only 10% odds. May rate cut probability has also dropped to less than 40% from ~70% previously and the first rate cut is only seen in June.
  • Germany ZEW expectations improved for a seventh consecutive month, suggesting a more stable outlook for Europe’s sick man. The index for current conditions slipped to -81.7 in February from -77.3 the prior month amid manufacturing sector struggles. Still, the ZEW institute’s gauge of expectations rose to 19.9 from 15.2 in January. That is above the 10-year average of about 13.
  • In January, China recorded RMB6.5 trillion in new aggregate financing, significantly surpassing the median forecast of RMB5.6 trillion and maintaining the year-over-year growth of the outstanding amount of aggregate financing at 9.5%, consistent with December. The better-than-expected growth was primarily attributed to the increase in loans, with new RMB loans reaching RMB4.92 trillion, exceeding the expected RMB4.5 trillion. Nevertheless, M2 growth slowed to 8.7% year-on-year (consensus: 9.3%; previous: 9.7%). The deceleration in money supply was partially influenced by the timing of the Lunar New Year and a high base.

     

    Macro events: Indonesian Presidential Election, UK CPI (Jan), EZ Employment (Q4), Japan GDP (Q4). Speakers: ECB’s de Guindos, Cipollone; BoE's Bailey hearing; Fed’s Goolsbee, Barr

    Earnings: Commonwealth Bank of Australia, Sony, Cisco, Occidental Petroleum, Heineken, Tokio Marine, Equinix, CME, EssilorLuxottica, Kraft Heinz.

    In the news:

  • China's BYD plans new electric vehicle plant in Mexico, says Nikkei (Reuters)
  • Bezos sold $4bn in Amazon stock over the past week (FT)
  • Cost cuts to help Lyft turn cash flow positive in 2024; shares surge (Reuters)
  • Airbnb sees Q1 revenue above Street estimates on strong international travel (Reuters)
  • Indonesia is heading to the polls to elect Jokowi's presidential successor (CNBC)
  • Japan’s Kanda: MOF Will Take Appropriate Steps on FX as Needed (Bloomberg)

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

For a global look at markets – go to Inspiration

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.

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.