Global Market Quick Take: Asia – June 27, 2024 Global Market Quick Take: Asia – June 27, 2024 Global Market Quick Take: Asia – June 27, 2024

Global Market Quick Take: Asia – June 27, 2024

Macro 6 minutes to read
APAC Research

Key points:

  • Equities: Amazon shares hit a record $2 trillion market cap
  • FX: USDJPY above 160 and USDCNH at 7.30
  • Commodities: Oil and copper prices drop due to higher inventories
  • Fixed income:  10-year Treasury yield breaks above 4.3%
  • Economic data: US GDP, jobless claims, Biden/Trump debate

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

QT 27 Jun

Disclaimer: Past performance does not indicate future performance.

In the news:

  • Stock Market Today: S&P 500 gains as Amazon jumps to join $2T club for first time (Investing)
  • Micron Q3 results beats estimates on AI-led memory chip demand; guidance in-line (Investing)
  • US regulators could approve spot ether ETFs for launch by July 4, sources say (Investing)
  • Morning Bid: Inflation scares and yen bears (Yahoo)
  • Stocks Rise as Tesla, FedEx, and Amazon Provide a Boost (Barron’s)
  • This Sector Is Leading the S&P 500's Gains. It's Not Information Technology (Barron’s)
  • Yen Weakens to Lowest Since 1986 (Barron’s)

Macro:

  • US new home sales plunged 11.3% in May to 619k well beneath the expected 640k, and the prior, which was revised much higher, to 698k from 634k.
  • Wall Street’s biggest banks passed the Fed’s annual stress test, paving the way for higher shareholder payouts. Each of the 31 lenders assessed stayed above its minimum capital requirements during a hypothetical recession, the central bank said. The US central bank’s test found that the aggregate decline in the capital ratios for the 31 banks was 2.8 per cent of risk-weighted assets, up slightly from last year, “but within the range of recent stress tests.”
  • ECB’s Rehn said that he sees bets for two more rate cuts this year as reasonable", with a market terminal rate view of 2.25%-2.5% and did attempt to nullify France's uncertainty with his remarks, "sees no disorderly market moves in France".
  • Australia’s May inflation report showed a further increase in price pressures, marking the third consecutive month that the figure exceeded expectations. Headline May CPI reached the 4.0%-mark on the headline from 3.6% in April and 3.8% expected. The trimmed mean core measure, which smooths out volatile items, advanced to 4.4% YoY versus 4.1% a month earlier. This has boosted the case for a rate hike from the Reserve Bank of Australia. Markets are now pricing in a 50% chance of a September rate hike, up from 15% just a day ago.

Macro events: Biden/Trump debate on CNN, Riksbank Announcement, China Industrial Profits YTD (May), EZ Sentiment Survey (Jun), US GDP Final (Q1), US Jobless Claims (Jun 22)

Earnings: Walgreens Boots Allianc, McCormick, AcuityBrands, SimplyGood, Apogee, Lindsay, Nike, Accolate, American Outdoor Brands, Pinstripes

Equities:  U.S. equities exhibited mixed performance, though underlying market fundamentals displayed weakness, with 10 out of 11 S&P sectors declining. A few large-cap, heavily weighted index stocks contributed to a stronger market appearance. Amazon (AMZN) shares reached a record high, hitting a $2 trillion market cap and lifting the Consumer Discretionary (XLY) sector alongside significant gains in Tesla (TSLA), which rose 4.8%. Apple (AAPL) also remained a positive contributor to major indices, gaining 2%. Post-market, Micron experienced an 8% decline following earnings, as their quarterly forecast fell short of investor expectations.

Fixed income: Treasuries extended losses in the US afternoon session, despite a 5-year auction that stopped through the WI level. Investors are now focused on Thursday’s 7-year auction, GDP data, and Friday’s PCE print. Initial weakness was linked to widening swap spreads and continued yen losses. The decline began in the Asian session, triggered by a significant selloff in Australian bonds following hotter-than-expected CPI data. BlackRock's $54 billion iShares 20+ Year Treasury Bond ETF (TLT) saw record inflows of $2.7 billion on Monday, its largest since 2002, as investors adjust expectations for Federal Reserve rate cuts. This brings its total inflows to $4.4 billion for the year, despite a nearly 3% loss.

Commodities: Oil prices edged lower on Wednesday after the EIA reported an unexpected rise in US crude stockpiles, sparking concerns about declining demand. US crude inventories increased by 3.591 million barrels last week, defying expectations of a 3 million barrel drop. Copper futures stayed below $4.4 per pound, their lowest since mid-April, due to uncertain global demand and rising inventories. Recent PMI reports indicate a bleak manufacturing outlook in major economies, worsened by slowing industrial demand in China. Despite an anticipated seasonal decrease, Chinese copper inventories remained high in June, driven by robust domestic production from scrap. This has kept Shanghai bonded warehouse delivery prices at a discount to the LME for over a month.

FX: The US dollar rose to its highest in eight weeks due to higher US yields and month/quarter-end buying, with market focus shifting to the upcoming US presidential debate on CNN. Despite this, AUDUSD resisted the strong dollar pressure, closing nearly unchanged and as the best G10 performer after a surprising May CPI left room for another RBA rate hike. AUD strength is expected to be more pronounced on crosses, with AUDUSD needing a weaker USD to sustain a rally past 0.67. AUDJPY reached record highs at 106.97 and AUDNZD rose above 1.09. USDJPY hit fresh 30+ year highs at 160.87 despite intervention threats. EUR faced pressure ahead of the French elections and from dovish ECB comments, while GBPUSD slipped below its 100-day moving average. The Chinese yuan is in focus as USDCNH rose to 7.30 for the first time since November 2023, impacted by USD strength and JPY weakness.

 

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

For a global look at markets – go to Inspiration.

 

 

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