Access all our platforms from a single account.
Global Market Quick Take: Asia – January 08, 2025
Key points:
- Macro: ISM Services PMI, US Imports and labour markets remain strong
- Equities: US markets a notch lower after strong US economic data. Nasdaq 100 fell 1.8%
- FX: Driven by strong economic data, USD saw largest gains against CHF and EUR
- Commodities: WTI rises above $74 and Copper holds after rising 2%
- Fixed income: 10 year Treasury auction posts highest yield since 2007
------------------------------------------------------------------
Disclaimer: Past performance does not indicate future performance.
Macro:
- ISM Services PMI rose to 54.1 in December 2024 from 52.1 in November, exceeding expectations of 53.3. Business Activity Index increased to 58.2 percent, marking six consecutive months of growth and New Orders Index edged up to 54.2 percent, while the Employment Index slightly decreased to 51.4 percent, remaining in expansion for the fifth time in six months.
- US job quits dropped to 3.065m from 3.283m, with the quits rate falling to 1.9%. Declines were seen in accommodation and food services (-85k) and arts, entertainment, and recreation (-22k).
- Job openings rose by 259k to 8.098 million, exceeding expectations. Gains occurred in professional and business services (+273k), finance and insurance (+105k), and private educational services (+38k), while information decreased (-89k). Hires and separations stayed at 5.3 million and 5.1 million. Quits fell by 218k to 3.065 million, with layoffs steady at 1.8 million.
- US imports rose 3.4% to $351.6 billion, the largest since March 2022, due to expedited shipments before a potential strike and tariffs. Goods imports increased by $11.6 billion to $280.9 billion, with rises in gold, oil, semiconductors, aircraft, foods, and vehicles. Service imports slightly rose to $70.6 billion.
Equities:
- US - The S&P 500 fell by 1.1%, the Dow Jones dropped 178 points, and the Nasdaq 100 declined by 1.8% due to higher Treasury yields, driven by hotter ISM services and Jolts jobs data. Tesla shares slipped 4% following a downgrade by Bank of America citing most of the EV maker’s upside has been recognized. Other big movers include MicroStrategy ( -9.94%) and Palantir (-7.8%).
- Korea – Samsung Electronics reported earnings of 6.5T won which missed quarterly profit estimates of 8.96T won. The disappointing results highlights the challenges and competition Samsung is facing from other AI chip makers like SK Hynix and Micron.
- Hong Kong – The Hang Seng Index fell 1.22% yesterday, led by Tencent which was down 7.28% after being added to the US military blacklist.
FX:
- The USD saw a broad strengthening against major currencies driven by strong economic data. The largest gains were against the CHF rising by 0.52% and the EUR increasing by 0.47%.
- GBPUSD dropped by 0.3% to 1.2483, with UK house prices declining for the first time in nine months, despite the property market having its best year since the pandemic.
- EURUSD traded below 1.035 ending Tuesday with losses over 0.47% after President-elect Trump threatened tariffs on Canada and Mexico, boosting the Greenback.
- JPY weakened as strong US data delayed Fed rate cut expectations. USDJPY rose to 158.17, with a high of 158.42. Finance Minister Kato warned against currency moves. Investors await BOJ Deputy Governor Himino's speech for rate hike insights.
Commodities:
- WTI crude oil futures rose above $74 per barrel, nearing three-month highs, due to concerns about reduced Russian and Iranian supply from Western sanctions. This increased demand for Middle Eastern oil, leading Saudi Arabia to raise prices for Asia in February, the first hike in three months.
- Gold prices fell to around $2,650 per ounce after a 1% rise, pressured by a stronger dollar and rising Treasury yields. Robust U.S. job and services data suggested fewer Fed rate cuts, while the dollar's rebound and concerns over inflation from proposed tariffs further impacted gold's appeal.
- Copper futures held at $4.15 per pound, sustaining a 2% rise. The rally was driven by a weaker US dollar amid reports of a softer tariff stance by the Trump administration, though Trump denied this, causing caution. Copper prices were also supported by China's improved outlook, with Beijing promising "more proactive" policies and lower interest rates to boost growth.
Fixed income:
- Treasuries declined, primarily in response to the release of the November JOLTS job openings data and December ISM services index figures. These losses persisted through the 10-year note auction, which exhibited a slight tail. The market is set to encounter another duration event with the $22 billion reopening of the 30-year bond.
- Yields increased by 2 to 6 basis points across the curve in a bear steepening move, which widened the 2s10s and 5s30s spreads by 4 and 2 basis points, respectively. The 2s10s spread peaked at 39.6 basis points, the steepest since May 2022, while the 5s30s spread reached its highest point since October 25.
For a global look at markets – go to Inspiration.