Global Market Quick Take: Asia – November 22, 2023 Global Market Quick Take: Asia – November 22, 2023 Global Market Quick Take: Asia – November 22, 2023

Global Market Quick Take: Asia – November 22, 2023

Macro 5 minutes to read
APAC Strategy Team

Summary:  Risk-on tone was hindered, with equities slipping while bonds and dollar gained in the pre-Thanksgiving trading. FOMC minutes garnered little reaction, while commentary from BOE officials was more hawkish. GBP turned out to be the G10 outperformer while EURUSD reversed back to 1.09. UK’s autumn budget statement will be in focus today. Copper surged to fresh two-month highs and Gold took a look over $2k.


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

US Equities: Markets pulled back modestly, with the S&P500 declining 0.2% to 4,538 and the Nasdaq shedding 0.6% to 15,934. Information tech was the worst-performing section in the S&P500. Microsoft dropped by 1.2% as OpenAI was in discussion with Sam Altman, including possibly his reinstatement as CEO. Retailers underperformed. Lowes slid 3.1% after cutting forecasts and Kohl’s and Best Buy declined after missing estimates and downbeat outlooks. After the market close, Nvidia reported results surpassed analysts’ forecasts for revenue and profits but warned that advanced chips that are subject to US licensing requirements to ship to China “will decline significantly.” Nvidia’s shares dropped by over 1% in the extended trading.

Fixed income: Treasury yields edged lower in a choppy session, with the 2-year yield falling 4bps to 4.87% and the 10-year yield sliding 3bps to 4.39%. The FOMC minutes offered no significant information. The results from the $15 billion 10-year TIPS were weak and the inflation-protected securities were awarded at 3.2bps higher in yield than the level traded at the auction deadline, a low 2.18x bid-to-cover ratio and softer non-dealer demand.

China/HK Equities: Chinese property developers surged as Bloomberg reported that Chinese financial regulators are drafting a list of 50 developers, including private enterprises like Longfor, deemed eligible for additional financing support. The Chinese yuan strengthened to as low as 7.13 against the dollar, further boosting sentiment. The Hang Seng Index gained as much as 1.6% in early trading but pared all gains to finish the session 0.3% lower after another Bloomberg story, saying that PBoC asked banks to limit Q1 2024 new loans within the quarterly average over the past five years, which is lower than the amount in Q1 of this year. Alibaba, Meituan, JD.COM, and Baidu added 1%–3%, while Xiaomi plunged 4.9% despite earnings beat. The CSI300 ticked up 0.1%. After the market close, Baidu reported a 6% YoY increase in revenue to RMB 34.4 billion, in line with the consensus forecast. Online marketing revenue grew by 7% YoY to RMB 21.3 billion. Adjusted net profit increased 23% YoY to RMB 7.3 billion, 16% above estimates. iQIYI reported inline revenue and a 10% beat to adjusted net income, driven by advertising recovery and lower expenses.

FX: The dollar firmed on Tuesday, reversing higher from 103.20 as some consolidation ensued after the dollar’s sharp decline earlier in the week. GBPUSD pushed higher to 1.2560 highs amid hawkish BOE commentary, and focus shifts to Autumn statement today. EURUSD however slipped back to 1.09 – with the big figure support holding up – suggesting gains to 1.10 could return. USDJPY returned back above 148, but support at 100DMA at 146.61 remains in focus. AUDUSD softened to sub-0.6560 despite hawkish RBA minutes yesterday and 200DMA at 0.6588 remains in focus. USDCNH bounced off the 200DMA and PBOC’s fixing will be key again today to drive a move towards 7.10.

Commodities: Crude oil prices steadied after gains since Friday brought Brent to over $82/barrel amid OPEC supply cut expectations. API inventory data showed a build of 9.05 million barrels last week, but data was largely ignored and focus turns to EIA figures due today ahead of Sunday OPEC meeting. Copper touched 2-month highs buoyed by continued Yuan strength, China stimulus hopes, strong demand from the renewable industry and supply concerns. Gold broke above USD 2,000/oz, albeit paring back beneath in the NY afternoon.

Macro:

  • FOMC minutes were balanced and garnered little market reaction, as they noted that all participants agree to ‘proceed carefully’ and would be watching whether sufficient progress has been made in bringing down inflation. Officials generally agreed to keep rates on hold for some time, and noted that financial conditions had tightened significantly.
  • Bank of England speakers including Governor Bailey pushed back on market pricing for rate cuts. He said inflation risks were still on the upside, with wage pressures and Mideast conflict risks underpinning. BOE’s Mann also said a further interest rate increase was warranted.
  • ECB’s Lagarde said that it may be too early to declare victory on inflation. She emphasized that the ECB will ‘remain attentive’ to “ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary” but “can act again if we see rising risks of missing our inflation target.” Separate comments from Board member Schnabel echoed inflation fears as well.
  • Canada’s inflation was in-line with expectations. Headline rose 3.1% YoY, slowing from last month’s 3.8% YoY, while core trimmed median rose 3.6% from upwardly revised 3.9% for September.

Macro events: UK Autumn Statement, Dutch Elections, US Durable Goods (Oct), US Uni. of Michigan Final (Nov), Australia Flash PMIs (Nov)

Earnings: Deere, Sage

In the news:

  • Nvidia’s revenue triples as AI chip boom continues (CNBC)
  • China Guides Banks to Cap Early 2024 Loans, Shift Some Forward (Bloomberg)
  • Singapore pegs 2024 GDP growth between 1% and 3% (Nikkei)
  • US retailers brace for a tough holiday season despite discounts (Reuters)

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

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