Global Market Quick Take: Asia – March 12, 2024

US Equities: Ahead of the CPI release, the S&P 500 Index ticked down by 0.1% while the Nasdaq 100 Index pulled back 0.4%. Nvidia declined for the second day in a row, falling 2%. Meta, shedding 4.4%, was the worst performer in the Nasdaq 100, followed by Advanced Micro Devices. Surging 8.7%, Moderna was the best former in the S&P 500 and the Nasdaq 100. In the extended hours, Oracle jumped more than 13% after it reported a 7% Y/Y growth in revenue to $13.3 billion, in line with analyst estimates but the management said growth could be higher if not due to supply constraints. The enterprise software giant beat earnings forecasts with an EPS of $1.41, surpassing $1.38 projected by analysts.

Hong Kong/China Equities: The Hang Seng Index surged 1.4% to 16,588, driven by the reduction of deflation fears following a larger-than-expected CPI increase in China. Positive market sentiment was further supported by the chairman of Hong Kong's Securities and Futures Commission calling for a lower minimum asset requirement for south-bound Stock Connect investors, potentially boosting mainland investment in stocks traded in Hong Kong. Notable sector outperformance included China's Internet, EV, and consumer names, with Bilibili rising 11.6% and JD.com gaining over 6%. The solar space also witnessed positive momentum, as Xinyi Solar gained 11.2% on reported declines in photovoltaic glass inventory. In the A-share market, the CSI300 climbed 1.3%, driven by new energy stocks, particularly lithium battery companies like CATL, which surged more than 14%. Despite the market's resilience on Monday, the underwhelming Two Sessions, the Chinese authorities' firm stance on deleveraging the property sector, and the widening volume decline in property sales in the 21 major cities in March so far may limit the improvement in the market sentiments.

Fixed income: Treasuries pulled back, with yields rising most in the short end of the curve ahead of today’s CPI report. The rise in the 3-year and 5-year inflation expectations in the New York Fed’s survey of consumers had muted impacts. The 2-year yield rose 6bps to 4.54% while the 10-year yield added 2bps to 4.10%.

FX: The dollar saw mild gains, but DXY index faced resistance at 103. Japanese yen was the outperformer in G10 and the only currency that could end up in gains. USDJPY eyeing a test of 200DMA at 146.25 break of which opens the door to Feb low of 145.90 especially is US CPI reaffirms soft landing hopes today. Equity sentiment turning sour weighed on the closely correlated sterling and GBPUSD was the worst performer of the day as it slipped to 1.28 handle and EURGBP bounced higher from 0.85 support. UK wage data is due today and sticky wages could support sterling. EURUSD also stayed rather resilient and bounced higher from 1.0915. AUDUSD tested the 0.66 handle but was seen bouncing higher to 0.6620 in early Asian hours. Bitcoin (XBTUSD) rallied to fresh record highs of 72K amid ETF demand frenzy and fears of coin supply shortage.

Commodities: The rally in Gold seems to have cooled ahead of the US CPI release today, and the 3% gains of the last week could be at risk if a hot print is seen. However, if we get a soft print, $2,200 may be on the radar for yellow metal which is supported by central bank buying and safe-haven demand as well. Iron ore futures slumped over 6% in Singapore on Monday as stockpiles in Chinese ports were the highest in a year, signaling pressure in real estate and manufacturing sectors. Crude meanwhile trading mixed ahead of US inflation, as well as oil market reports from OPEC and EIA on tap.

Macro:

• US CPI preview: Markets will be watching the US inflation release for February today. Headline CPI is expected to come in firm at 3.1% YoY and slightly stronger on a MoM basis at 0.4% from 0.3% in Jan. Core CPI is expected to soften to 3.7% YoY from 3.9% and 0.3% MoM from 0.4% in Jan. Saxo’s Strats team expect the market is positioned for a softer or mildly hot print, that will reaffirm soft-landing hopes, and this could bring Nasdaq 100 up as much as 1%, USDJPY lower to test Feb lows of 145.90 and broadly support commodities like silver, copper and Gold. An upside surprise could mean as much as 3% correction in Gold. For more details, read this article.
• Japan’s February PPI was also stronger than expected and prior prints as it came in at 0.6% YoY (vs. 0.2% prior, 0.5% exp) and 0.2% MoM (0.0% prior, 0.1% exp). BOJ’s Ueda speaks in the parliament today at 0200 GMT.

Macro events: EIA STEO, OPEC OMR; UK Labour Market Report (Jan/Feb), US CPI (Feb)

Earnings: Archer-Daniels-Midland, Assicurazioni Gernerali, MINISO, Qifu Technology

In the news:

• Biden Budget Seeks More Aid for Families, Higher Taxes on Wealthy Households, Corporations (WSJ)
• Hong Kong’s SFC proposes slashing Stock Connect threshold by 80% to draw mainland Chinese funds to city’s market (SCMP)
• Chinese regulators ask large banks to step up support for Vanke (Reuters)
• White House Forecasts Somewhat Higher Interest Rates (WSJ)
• US companies to announce investments of over $1 bln in the Philippines (Reuters)
• OPEC, IEA at most divided on oil demand since at least 2008 (Reuters)
• Reddit Launches Long-Awaited IPO With $748 Million Target (Bloomberg)

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

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