Global Market Quick Take: Asia – November 24, 2023

US Equities: With the cash market closed for Thanksgiving, both the S&P500 and Nasdaq 100 eMini futures edged up 0.1%. On Friday, eyes will be on the Black Friday sales at major US retailers. The NYSE and Nasdaq will close early at 1 p.m. New York time today.

Fixed income: The cash Treasury market was closed on Thursday for the Thanksgiving holiday. Futures were under pressure as German Bunds and UK Gilts sold off. As the cash Treasury market resumed trading in Tokyo this morning, the 2-year yield rose 3bps to 4.93% and the 10-year yield increased by 4bps to 4.45%. Overnight, the 10-year Bund yield rose by 6bps to 2.62% after Germany suspended the constitutional limit on borrowing for a 4^th consecutive year. The 10-year UK Gilt yield surged by 10bps to 4.26% after the flash services PMI rose above 50, and the manufacturing PMI also registered a stronger-than-expected improvement to 46.7. The cash Treasury market closes early at 2 p.m. New York time today.

China/HK Equities: The Hang Seng Index rebounded 1% to 17,911 and CSI300 climbed 0.5% to 3,562. Chinese property developer stocks gained on a series of Bloomberg reports about a whitelist of 50 developers eligible for government-directed financing support from banks, calls from members of the Standing Committee of the National People’s Congress, and financial regulators allowing banks to extend unsecured short-term loans to developers. Additionally, Shenzhen lowered down payment requirements for second-home buyers and the Shanghai municipal financial regulators held a meeting with financial institutions to urge them to extend credits to SOE as well as private developers. Longfor surged 13.4% and Country Garden soared 23.5%, as both were reportedly on the whitelist.

Baidu, surging 6.8%, gaining for a second consecutive day following post-earnings analyst upgrades. EV names advanced in both the mainland and Hong Kong bourses following Chongqing Changan Automobiles and Huawei both indicated strong order books for their new EV models.

FX: The dollar traded sideways amid the Thanksgiving holiday. NZDUSD remained at the top of the G10 leaderboard, trading around 0.6050 and focus remains on 200DMA at 0.6092. GBPUSD rose to highs of 1.2564 on improvement in UK PMIs while EURUSD remained soft just above 1.09 amid mixed EZ PMIs and Germany’s debt limit suspension. EURGBP broke below 0.87 but recovered to trade just around the big figure later. USDJPY back above 149.50 and could test 150+ levels again, while EURSEK rose sharply to 11.46 on Riksbank no change.

Commodities: Crude oil held its decline with OPEC discord continuing to unnerve traders. China’s efforts to boost property market sentiment however boosted metals, with Copper prices up although iron ore fell from a recent 9-month high as China’s NDRC attempted to curb speculation in the market. Gold tried to rise to $2k again but gains remained modest amid higher yields in EZ and UK as well as a temporary truce in the Middle East conflict.

Macro:

• November PMI in UK and Europe increased marginally, with UK services and composite PMIs jumping up to expansion territory of above-50. French PMIs were weaker than expected while German numbers came in better-than-expected.
• Germany is to suspend the borrowing limit for 2023 for the fourth consecutive year after the budget ruling. German Finance Minister Lindner said they will put to the Cabinet next week the supplementary budget for 2023.
• Swedish Riksbank maintained its key rate at 4% vs. an expected hike to 4.25%. Riksbank stated that monetary policy needs to be contractionary and is prepared to raise the policy rate further if inflation prospects deteriorate.
• ECB October Meeting minutes noted that the Governing Council is seeing evidence that policy is working as intended but remained in favor of agreeing to keep open the option of another interest rate rise, recognising the need to avoid an unwarranted loosening of financial conditions.
• Japan’s October inflation came in below expectations, but still well above the BOJ’s 2% target. Headline was at 3.3% YoY, higher than last month’s 3.0% and core also accelerated to 2.9% from 2.8%, although it was below the expected 3.0%. Core-core measure however showed some signs of cooling but remained high at 4.0% YoY (vs. exp 4.1% and prev 4.2%).

Macro events: German GDP Detailed (Q3), Sweden PPI (Oct), German Ifo (Nov), US Flash PMIs (Nov)

Earnings: No major earnings release

In the news:

• Israel and Hamas to start four-day truce on Friday -Qatar mediators (Reuters)
• WHO asks China for more information about rise in illnesses and pneumonia clusters (AP)
• China Weighs Unprecedented Builder Support With First-Ever Unsecured Loans (Bloomberg)
• Volume of Apple sales underperforms Huawei, Xiaomi on China's Singles Day – data  (Reuters)

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