Global Market Quick Take: Asia – November 15, 2023 Global Market Quick Take: Asia – November 15, 2023 Global Market Quick Take: Asia – November 15, 2023

Global Market Quick Take: Asia – November 15, 2023

Macro 5 minutes to read
APAC Research

Summary:  Softer US inflation boosted the peak Fed rates narrative, sending Treasuries and equities rallying as money markets priced in 100bps of rate cuts for 2024. Dollar was sharply lower, sending SEK, NZD and AUD leading the gains. GBPUSD also pushed higher to 1.25 with an added reason from wage pressures not cooling enough and UK CPI will be the key focus today. China’s activity data and Xi-Biden talks could dominate the headlines today along with US PPI and retail sales due later.

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

US Equities: With US inflation cooling and bond yields sinking, the S&P500 surged 1.9% to 4,495, and the Nasdaq 100 soared 2.1% to 15,812. The gains were broad-based, with Tesla rising 6.1%, and Nvidia, gaining 2.1%, reaching a new record high. Home Depot surged 5.5% on an earnings beat despite warnings about weak demand for big-ticket items.

Fixed income: Treasuries rallied, and yields sharply declined on a softer-than-expected CPI report. The belly of the curve outperformed, with the 5-year yield dropping by 23 bps to 4.44%. The 2-year yield fell by 20 bps to 4.84%, and the 10-year yield shed 19 bps to 4.45%. The money market curve is pricing in a 50-bps rate cut in July.

China/HK Equities: On Tuesday, markets stalled after an initial attempt to extend the rally, with the Hang Seng Index and the CSI300 hovering near the previous close. Nonetheless, after the market closed, a Bloomberg news story broke, stating that China is considering having the PBOC provide low-cost funding through policy banks, amounting to at least RMB1 trillion, to finance urban village renovation and affordable housing programs. The news lifted the November Hang Seng Index futures by nearly 1%, reaching as high as 17,562. The front-month Hang Seng Index futures extended gains to 2.6% to 17,858 following a soft US CPI print that affirmed the notion of the end of the US Fed rate hike cycle. The Hong Kong and China markets are poised to open stronger on Wednesday. This morning, China will release data on industrial production, retail sales, and fixed asset investments, and the PBOC is scheduled to roll over 1-year Medium-term Lending Facilities.

FX: The USD was sold-off on soft CPI report boosting the case for rate cuts from the Fed. Biggest gains came in SEK which was up 2.4%, and our momentum chart in yesterday’s FX note had shown the most positive trend in SEK. Although Swedish CPI data came in cooler than expected on both headline and core metrics and that also resulted in some dovish repricing of the Riksbank. NZDUSD rose over 1 big figure to move above 0.60 and AUDUSD rose above 0.65. GBPUSD rose to 1.23 on the labor data but extended gains to 1.25 on US inflation print, and UK CPI will be on watch today. EURUSD moved above 1.0850 while USDJPY slid below 150.50 as Treasury yields slumped close to 20bps although some gains returned following the sharp contraction in Q3 GDP just reported.

Commodities: Oil prices ended the day broadly unchanged after an initial bump higher. OPEC and IEA outlook seems to be sending mixed signals, with IEA talking about a 2024 surplus amid weakening demand and production growth in the US and Brazil beating forecasts. IEA inventory data for two-week period will be on watch today. Gold rallied after the soft US CPI to touch highs of $1970. The 21DMA at $1973 stalled gains and it settled near $1960 later. Copper also jumped higher on weaker dollar and China’s activity data for October will be on watch today.


  • US October CPI came in below expectations on both the headline and the core measures. Headline M/M prices were flat in October, beneath the expected +0.1% rise and cooling from September's +0.4%, while the Y/Y eased to 3.2% from 3.7%, beneath the 3.3% forecast. The core metrics were also soft: Core M/M rose 0.2%, softer than the prior and expected 0.3%, while Core Y/Y rose 4.0%, beneath the prior and expected 4.1%.v Gasoline and car prices drove much of the decline, but rents inflation also resumed its downtrend. Fed speakers tried to maintain a neutral stance, saying there is more work to be done, but market is now pricing in 100bps of rate cuts next year.
  • UK labor market and wages showed signs of cooling, but at a very modest pace. Payrolled employees rose by 33k in October, beating consensus estimate of -17k. Unemployment rate was unchanged at 4.2% in 3M to September. Average weekly earnings growth eased to 7.7% in 3M to September from 7.9% previously. Private sector wage growth fell to 7.8% in 3M to September from 8.1% previously. CPI figures today are expected to slow to sub-5% from 6.7% in September.
  • German ZEW expectations rose to 9.8 in November from -1.1 in October with current conditions little changed at -79.8. This was the fourth consecutive month of improvement and signals that a bottom may have been in place for Germany.
  • Japan GDP data reported this morning showed a sharp contraction. GDP shrank by 2.1% annualized in Q3 vs. estimate of -0.4% due to falling business spending and higher imports as a weak yen underpinned.
  • The International Energy Agency (IEA) said the oil market should return to surplus in early 2024 even if Saudi Arabia extends its production cuts that have tightened supplies this year. The IEA said slowing economic global growth and increased supply should reduce the draw on stockpiles.
  • According to Bloomberg, citing "people familiar with the matter," China's central bank plans to inject at least RMB 1 trillion at low-interest rates via policy banks to support urban village renovation and affordable housing programs. This initiative may take the form of the Pledged Supplemental Lending program, previously conducted by the PBoC between 2014 and 2016, during which it printed over RMB 3 trillion to finance shantytown renovation projects. Currently, RMB 2.9 trillion of the program remains outstanding.

Macro events: China Retail Sales/Industrial Output (Oct), UK CPI (Oct), EZ Trade Balance (Sep), US PPI Final Demand (Oct), US Retail Sales (Oct)

Earnings: Cisco, TJX, Tencent, JD.COM, JD Logistics, XPeng

In the news:

  • US House approves government funding bill with bipartisan support (FT)
  • Amazon Reaches Deal to Run Shopping Ads on Snap (The Information)
  • Tencent, Alibaba Earnings Hold Key to $44 Billion China Tech Run (Bloomberg)
  • Home Depot shares rally on earnings beat, even as home improvement sales level off (CNBC)
  • Ethiopian Airlines signs deal for up to 67 Boeing jets (Asian Aviation)
  • Renault seeks to charge up investors for EV unit IPO (Reuters)


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