Global Market Quick Take: Asia – September 24, 2024

Global Market Quick Take: Asia – September 24, 2024

Macro 6 minutes to read
APAC Research

Key points:

  • Equities: Tesla climbed 4.9% ahead of its robo taxi launch on Oct 10
  • FX: The euro plunged across the board on PMI weakness
  • Commodities: Gold continues to break all-time highs
  • Fixed income: 3 month Treasury yield continues to fall
  • Economic data: RBA decision, German Ifo, US consumer confidence

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

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

0924 

Disclaimer: Past performance does not indicate future performance.

 

In the news:

  • Biden proposes banning Chinese vehicles from U.S. roads with software crackdown (CNBC)
  • Euro zone business activity unexpectedly contracts in September, PMI shows (Reuters)
  • Indian shares continue to scale new peaks after U.S. rate cut (Reuters)
  • UniCredit boosts its stake in Commerzbank, applies to own up to 29.9% of the German bank (CNBC)
  • Biohaven Surges After Delaying Progression By Up To 70% In A Rare Disease (IBD)
  • Trump Media plummets 10% as post-lockup selloff picks up steam (CNBC)
  • Fed officials leave door open to another large interest-rate cut (BT)

Macro:

  • PMI data was weaker across the board, but weakness in Europe, particularly in Germany, was the most alarming. German manufacturing PMI for September slipped to 40.3, its lowest levels in a year, from 42.4 in August. This signaled structural manufacturing woes for Germany. Meanwhile, France’s services PMI also reverted back to contraction at 47.4 from August’s Olympics-driven surge to 53.1. Overall, Eurozone composite PMI fell to 48.9 in September from 51.0 in August. UK’s PMIs also slowed but still remained in expansion and looked far more robust than the Eurozone’s with manufacturing PMI at 51.5 and services at 52.8 from 52.5 and 53.7 respectively in August. US manufacturing flash PMI for September also unexpectedly fell to 47.0 from 47.9 (exp. 48.5), while services declined less than forecast to 55.4 (exp. 55.2, prev. 55.7), which meant composite marginally dipped to 54.4 from 54.6.
  • Fed speakers generally supported the 50bps rate cut decision from last week and remained open to more such jumbo moves if labor market deteriorated sharply. Kashkari noted that the balance of risks have shifted towards risk of further labor market weakening and higher unemployment. Atlanta Fed President Bostic said that the economy is normalising more quickly than previously thought, so monetary policy needs to as well. Goolsbee stated that many additional rate cuts will likely be needed over the next year, stressing the need for rates to be lowered "significantly".

Macro events: RBA Policy Announcement; German Ifo (Sep), US Consumer Confidence (Sep), Richmond Fed (Sep), Fed’s Bowman, BoJ's Ueda, BoC's Macklem

Earnings: AutoZone, KB Home and Thor Industries

Equities: The S&P 500 rose by 0.3%, while the Dow Jones gained 0.1%, both achieving new record highs on Monday after last week's rally driven by the Fed's first rate cut in four years, set at 50 basis points. The Nasdaq 100 also edged up by 0.3%. Investors closely analyzed comments from several policymakers to understand the rationale behind the Fed's significant rate cut. Fed officials, including Raphael Bostic, Neel Kashkari, and Austan Goolsbee, expressed support for the recent cut and hinted at the possibility of further reductions in the coming months. Among stocks, Intel shares jumped 3.4% following reports of potential multibillion-dollar investments from Apollo Global Management. Tesla climbed 4.9% as investors anticipated the upcoming robotaxi launch and third-quarter sales figures. However, concerns over economic growth persist, with US manufacturing data hitting a 15-month low and job market indicators showing signs of weakening.

Fixed income: Treasuries ended with minimal changes, and the yield curve steepened after volatile trading during U.S. hours driven by Federal Reserve commentary and a sharp decline in oil prices. Initially, yields rose when two Fed officials indicated a high threshold for further half-point rate cuts. The market rebounded as oil prices plunged, supported by haven demand before Iran’s president signaled a willingness to ease tensions with Israel. Treasury yields had returned to nearly unchanged levels from the belly to the long end, with 2-year yields declining by about 1 basis point, which steepened the 2s10s spread by just over 1 basis point for the day. Fed swaps showed little price movement, continuing to price in around 75 basis points of rate cuts over the two remaining policy meetings this year.

Commodities:  WTI crude oil futures fell 0.89% to $70.37 per barrel, and Brent Crude futures declined 0.79% to $73.90 per barrel, influenced by concerns over weak demand from China and an unexpected slowdown in European manufacturing. The eurozone reported a surprising contraction in business activity, with stagnation in services and further deterioration in manufacturing output. Conversely, Nymex front-month natural gas surged 7.4% to $2.613 per mmBtu, reaching its highest level in nearly three months. Gold prices hit new record highs, rising 0.26% to $2,628.72, while silver dropped 1.55% to $30.69. Iron ore prices with 62% iron content fell below $90 again due to demand uncertainties and high inventories. Recent economic reports from China continue to indicate a challenging recovery.

FX: The relative weakness in European PMI was discussed in the Weekly FX Chartbook yesterday and turned out to be the key theme in FX markets yesterday. This made euro the underperformer among the major currencies as markets increased the odds of an October ECB rate cut. Euro’s weakness was most pronounced against the activity currencies kiwi dollar and Australian dollar, and it also fell over 0.6% against the British pound amid the odds of diverging economic and policy dynamics. Germany’s Ifo will be in focus today given risks of a recession signaling need for faster rate cuts from the ECB. The weakness in euro also filtered through to other European currencies, particularly the Scandies. The Australian dollar will be on in focus today with the RBA expected to leave rates unchanged and potentially keep a hawkish stance with risks of a recession still at bay. China’s central bank has also cut policy rates yesterday, and a press conference from the PBoC is eyed today, given more stimulus measures could further boost commodity currencies.

 

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.