Global Market Quick Take: Asia – November 30, 2023

US Equities: The S&P500 and Nasdaq 100 finished modestly lower, falling by 0.1% and 0.2% respectively. Foot Locker soared 16.1% after the athletic footwear retailer reported strong Q3 results and Q4 guidance. General Motors jumped 9.3% after the automaker said it was raising dividends and unveiled a 10 billion share buyback plan. Salesforce gained nearly 9% in the extended hours on an upbeat outlook, surpassing analysts' expectations.

Fixed income: Treasuries extended their rally, with the 2-year yield falling 9bps to 4.65% and the 10-year yield sliding 7bps to 4.26%. The rally kicked off following softer prints in Australia and Germany CPIs. A downward revision to the Q3 PCE, a Beige Book which showed a slower economy and inflation in November, and dovish comments from Fed officials also added fuel to the positive sentiment towards Treasuries. Investors’ attention will be on the PCE and jobless claims data today and Fed Powell’s speaking on Friday.

China/HK Equities: Hong Kong stocks retreated for the fourth consecutive day, with the Hang Seng Index plummeting 2.1%, driven by declines in the internet, consumer, and property sectors. Meituan dropped by 12.2% after reporting in-line results but providing a more conservative revenue growth outlook for Q4, along with lower average order values and reduced in-store margins. In mainland bourses, the CSI300 declined by 0.9%, primarily due to decreases in the property, auto, new energy, and non-bank financial sectors. Investors are closely watching the release of China’s PMI data scheduled for Thursday.

FX: The dollar found a floor after dipping lower again in the early Asian lows on Wednesday on the back of Waller’s comments and a sharp spike in NZD following RBNZ’s hawkish hold. NZDUSD rallied to 0.62 before reversing later to settle around 0.6160. Softer than expected Aussie CPI pushed AUD to be the underperformer, as AUDUSD reversed to 0.66 from earlier highs of 0.6676. EURUSD also gave up the 1.10 handle after softer inflation prints in Germany and Spain and today’s regionwide CPI will be the next big test along with US PCE. GBPUSD stuck around 1.27 as Bailey said it is too early to talk about rate cuts. USDJPY testing a break of 147 after 10-year Treasury yields broke key support yesterday.

Commodities: Crude oil turns its eyes to OPEC decision due today where deeper production cuts are expected. Dovish repricing of the Fed also eased demand concerns, but weekly EIA data showed a surprise crude build. Copper briefly touched a 10-week high as mine closures brought supply risks back into focus. Gold extended its Santa rally on lower yields, although a recovery in dollar offset. We continue to caution for a consolidation here as cost of carry remains high, but gold remains on track for further gains in December and into 2024.

Macro:

• US Q3 GDP was revised higher to 5.2% from 4.9%, above expectations of 5.0%. Consumer spending eased to 3.6% from the prior 4%, but the latest Black Friday-Cyber Monday expenditures will be incorporated to the Q4 GDP report. The PCE prices saw revisions lower, the headline was revised to 2.8% from 2.9% with the core revised to 2.3% from 2.4%. October PCE data will be in focus today.
• European CPIs came in softer than expectations. German CPI was 3.2% YoY, below the consensus and down from 3.8%. Spanish CPI was 3.2% from 3.5% (3.6% expected) with the surprise coming in the core, which printed 4.5% from 5.2% and 5.0% expected. Euro area inflation is reported today, with consensus at 2.7% YoY from 2.9%, but expectations may have shifted lower.
• Fed’s Mester, a hawk and 2024 voter, repeated monetary policy is in a good place and the Fed has time to vet incoming data. Bostic, a dove and 2024voter, said that tighter monetary policy and financial conditions are biting harder into economic activity. Barkin stayed hawkish and said that he is not willing to take another rate hike off the table, warning he is still looking to be convinced on inflation.
• RBNZ decided to keep rates unchanged at 5.50% but shifted the path of OCR higher and does not expect rate cuts until mid-2025. We think RBNZ is looking at outdated data, and may need a reality check.
• Australia CPI came in below expectations at 4.9% YoY for October from 5.6% previously and 5.2% expected, which led to paring of some of the RBA rate hike bets.

Macro events: Australia Building Approvals, China PMI, Eurozone CPI and Unemployment Rate, US PCE Price Index, US Jobless Claims, Canada GDP, OPEC+ Meeting, Fed’s Williams, ECB’s Lagarde

Earnings: RBC, Toronto Dominion Bank, Dell, Marvell, Kroger, CSPC Pharmaceutical,

In the news:

• House Prepares to Drop China Investment Curbs From Defense Bill (Bloomberg)
• Jack Ma urges ‘change and reform’ at Alibaba (FT)
• Google Warns China Is Ramping Up Cyberattacks Against Taiwan (Bloomberg)
• Walmart shifts to India, cuts China imports (Reuters)

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

For a global look at markets – go to Inspiration.