Quick Take Asia

Global Market Quick Take: Asia – September 12, 2024

Macro 6 minutes to read
Saxo Be Invested
APAC Research

Key points:

  • Equities: Equities closed higher, boosted by tech
  • FX: Japanese yen reversed its early gains as US dollar pushed higher post-CPI
  • Commodities: Oil prices rebound to near $68
  • Fixed income: 10-Year Treasury Yield Halts Six-Day Losing Streak
  • Economic data: ECB, US PPI and Jobless claims

------------------------------------------------------------------

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

0912 

Disclaimer: Past performance does not indicate future performance.

 

In the news:

  • Stock Market Today: S&P 500 rides Nvidia-led rally to close higher (Investing)
  • Aggressive Fed rate cut next week could backfire, putting big tech in crosshairs (Investing)
  • Bank of England to hold Bank Rate this month but cut in Nov, economists say: Reuters poll (Investing)
  • Global EV sales up 20% in August despite 19-month low in Europe, Rho Motion says (Yahoo)
  • ECB to cut interest rates as growth dwindles, outlook unclear (Yahoo)

Macro: 

  • US CPI was as expected on the headline figures but a notch above expectations for the core which rose 0.3% MoM vs. 0.2% expected amid upward surprises in shelter and transport services. This has prompted markets to reduce the odds of a 50bps Fed rate cut next week, however the market still expects 100bps of rate cuts for this year. The fundamental story of sustained disinflation remains unaltered by this inflation report, as the pick-up in the core index was driven by components that have a much smaller weight in the core PCE deflator, the Fed’s preferred inflation gauge, or which are sourced from the PPI.
  • UK’s monthly GDP stagnated for a second month in a row in July, coming in below expectations of 0.2% MoM. GDP on a three-month basis at 0.5% was also below the estimate of 0.6%. Industrial and manufacturing production fell and missed forecasts. While the BOE is not expected to cut rates next year, but expectations for a November rate cut are rising.

Macro events: ECB Policy Announcement – preview here, IEA OMR, US Jobless Claims (w/e 7th Sep), PPI Final Demand (Aug)

Earnings: Adobe, Restoration Hardware, Kroger, Signet, Big Lots 

Equities: US stocks closed higher on Wednesday, driven by tech stocks as investors evaluated the latest inflation data and its impact on the Federal Reserve’s upcoming policy decision. The S&P 500 rose 1%, marking its third consecutive session of gains, while the Nasdaq surged 2.2%, led by strong performances from chipmakers like Nvidia (+8%) and Broadcom (+6.7%). Dow Jones also gained 124 points. Inflation data showed headline prices at a three-year low, but core inflation rose 0.3%, higher than expected. This led to speculation that the Fed will opt for a smaller 0.25% interest rate cut at next week's meeting, with traders reducing the likelihood of a 50-basis-point cut to 13%. Politically, the presidential debate increased the chances of a Kamala Harris election victory, boosting solar stocks like First Solar (+15.2%) and pushing down crypto-linked stocks like Coinbase (-1%).

Fixed income: Treasuries ended a volatile session with higher yields, leading to a notably flatter yield curve. This followed an initial selloff driven by the August CPI data. Recoveries in crude oil and US stocks from early losses, along with bear-flattening in gilts, also influenced the market, as did strong demand for the monthly auction of 10-year notes. US front-end yields had risen by nearly 5 basis points, while long-end yields remained relatively stable. The CPI data, which showed a larger-than-expected increase in the core index and higher real earnings growth, led Fed-dated OIS contracts to almost certainly price in a quarter-point rate cut on September 18, reducing the likelihood of a half-point cut. Specifically, 26 basis points of easing were priced in for September, down from 30 basis points on Tuesday. The 10-year note auction in the US afternoon, a $39 billion reopening, yielded 3.648%, the lowest since May 2023 and 1.4 basis points below the WI yield indicated at the 1pm bidding deadline.

Commodities: WTI crude rose by 2.37% to $67.31, and Brent Crude increased by 2.05% to $70.61. Hurricane Francine, which is expected to impact Louisiana and has caused some offshore oil platforms to shut down. Despite the rebound, oil prices remain near their lowest since May 2023 US natural gas futures climbed above $2.27 per MMBtu, driven by seasonal demand, record LNG exports, and China's growing use of natural gas in transportation. Gold prices edged lower by 0.2% to $2,511 an ounce. Iron ore prices held steady above $91 as investors assessed Chinese steel demand during its peak season.

FX: The US dollar was initially weighed by yen’s strength on Wednesday and the somewhat better performance for Harris in the presidential debate questioning the ‘Trump Trades’ that are usually seen to be USD-positive. However, the hotter-than-expected US CPI report overnight pushed the US dollar higher as odds of a 50bps rate cut from the Fed next week were wound down. The Japanese yen, that had earlier printed a YTD high of 140.72 against the US dollar in the Asian session on BoJ's Nakagawa hawkish comments, also retreated again. We discussed yen’s upside in this article, and continue to expect a move below 140 to come if US recession concerns deepen. Activity currencies such as Australian dollar and Canadian dollar outperformed while the Swiss franc underperformed as recession odds retreated. The euro is heading lower amid the USD strength and the pivotal ECB meeting coming up where a rate cut is expected but forward guidance gets more weight.

 

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

For a global look at markets – go to Inspiration.

Quarterly Outlook

01 /

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.