Global Market Quick Take: Asia – April 4, 2024

Macro 6 minutes to read
Charu Chanana

Chief Investment Strategist

Summary:  US stock futures are pointing higher as mixed US data and Fed Chair Powell’s comments kept rate cuts on the radar, and focus turns to US jobs data release on Friday. Japan stocks also extended their recent rally and the approaching earnings season could highlight increasing shareholder returns. Meanwhile, dollar slumped but that didn’t bring gains for the Japanese yen. USDJPY still close to 152 and faces intervention threat, particularly if NFP comes in better than expectations. Gold rose to $2,300 while Copper was up 3% to its highest levels since January 2023.


Saxo’s Q2 2024 Outlook titled “The wasted year” is now out. You can read it here.

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

Equities: US stock futures were modestly higher after Chair Powell reiterated that rate cuts will begin at some point this year. A somewhat softer ISM services print overnight also helped the Wall Street to stem the two-day rout and focus turns to the US jobs data due on Friday. Intel fell more than 8% after it disclosed $7 billion in operating losses for its foundry business through 2023, as it lost out more business to Asian rivals including TSMC and Samsung. Disney fell over 3% as CEO Iger wins proxy vote over Peltz with board’s election, while Paramount jumped 14% on reports of a deal with Skydance. Tesla managed to close higher despite dismal Q1 delivery numbers, and price target cuts and numerous brokerages, and Saxo’s equity Strategist Peter Garnry draws parallels between Tesla and Nvidia given their elevated expectations. Read the full article here.

Meanwhile, Japan stocks opened higher by 1% on Thursday as US ISM services miss and Chair Powell comments kept rate cuts on the radar. Japanese stocks are also approaching a season of full-year earnings reports which could bring the focus back on increasing shareholder returns. HK and China markets closed lower on Wednesday and will be closed today.

FX: The dollar weakened further yesterday with the miss in ISM services once again questioning the pushback to rate cut expectations that has been priced in by markets. Strong NFP data can bring some gains back for the dollar, but it remains hard to see a strong and sustained rally from here given seasonality and technicals remain out of favor for the dollar. Japanese yen, however, failed to gain despite lower yield and dollar, and USDJPY traded to highs of 151.95 before retreating to 151.60 on dollar weakness. Lack of intervention at these levels is a clear signal that Japanese authorities are unlikely to let the markets be fixated at certain levels, but NFP beat is a key risk for yen intervention. EURUSD rose to 1.0840 despite softer EZ inflation, while GBPUSD reclaimed 1.2650. Yuan continued to test the upper limit of its trading band, and offshore CNH will be in focus today as China goes on a long weekend holiday. Read our FX note on CNH bearishness to know more.

Commodities: Weaker dollar broadly supported commodities to extend gains. OPEC+ recommended no changes to the 2mb/d cut to output which has been in place since the start of the year. The current agreement is scheduled to continue until the end of June 2024. While this was widely expected, it provides some assurance that the recent rise in tension in the Middle East has not altered the group’s view on the market. On the weekly EIA data, crude stocks saw a surprise build, against the larger-than-expected draw in the private inventory data on Tuesday night. Gasoline and Distillates both saw larger than forecasted draws. Gold touched $2,300 level while copper was up 3%, hitting its highest level since Jan 2023.

Fixed income: The 10-year yields continue to test the critical resistance at 4.35%, moving higher earlier in the session but closing right at the level yet again. A break and close above 4.35% could signal a potential rise towards 4.5%. Key to watch the non-farm payrolls report on Friday where a beat on the expectations can drive yields higher.

Macro:

  • US data was mixed. ADP employment for March came in better than expected, but ISM services was soft but still in expansion. ADP for March came in at 184k, above the expected 148k, and the prior, revised higher, 155k. Headline ISM services printed 51.4 for March printed 51.4, falling short of the 52.7 expected and 52.6 prior. Prices paid fell to 53.4 (prev. 58.6), its lowest reading since March 2020, which was a welcome sign for the markets after the pushback seen to Fed rate cut pricing recently.
  • Fed’s Bostic said he thinks it is appropriate to cut rates in Q4 this year if the economy evolves as he expects. He also said he still only expects one rate cut in 2024. Chair Powell still remained inclined to believe that the recent pickup in prices was a bump, and does not see a material change in the overall picture. He reiterated that it will likely be appropriate to cut rates at some point this year.
  • Euro-area March CPI came in a notch lower than expected at 2.4% YoY (vs. 2.5% exp and 2.6% prior) suggesting that the move below 2% maybe just a few months ahead. June rate cut is priced in with 85% odds, and the probability could pick up further.

Macro events: ECB Minutes (Mar), Riksbank Minutes (Mar), Swiss CPI (Mar), EZ/UK Services and Composite Final PMI (Mar), US Goods Trade Balance R (Feb)

Earnings: Dollarama, Lamb Weston, RPM International, Conagra Brands

In the news:

  • Taiwan Quake Jolts Production of World’s Most Advanced Chips (Bloomberg)
  • Paramount, Skydance enter exclusive merger discussion, source says (Reuters)
  • Yellen won't rule out more protections for US clean energy sector amid Chinese excess capacity (Reuters)
  • Apple reportedly exploring personal home robots (CNBC)

 

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: 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...
  • 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...
  • 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 ...
  • 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

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.