Global Market Quick Take: Asia – September 19, 2023

US Equities: The markets attempted to rally from the recent range lows but ultimately retreated, resulting in the S&P500 and Nasdaq closing nearly flat. Energy stocks led in terms of performance as crude oil prices surged. Apple outperformed with a 1.7% gain, driven by optimistic analyst notes regarding iPhone demand.

Fixed income: With some concerns arising about the rise in crude oil prices, trading in the Treasury market remained calm in anticipation of the FOMC decisions on Wednesday. The 2-year yield saw a modest 2bp increase to 5.05%, while the 10-year yield dropped by 3bps, settling at 4.30%.

China/HK Equities: Property, consumer, and semiconductor stocks dragged down the Hong Kong equities market as investors doubted whether the recent green shoots in economic data could develop into a more significant recovery or stumble. The Hang Seng Index plummeted by 1.4% to 17,930. Macao casino operators outperformed as China's October Golden Week holidays approached. China's fiscal revenue in August declined by 4.6% YoY, underscoring weaknesses in land sales and other property-related fiscal revenues. The CSI300 performed better, gaining 0.5%, fueled by autos and pharmaceuticals.

FX: EUR saw a recovery towards 1.07 amid some hawkish rhetoric from ECB speakers pushing for higher-for-longer. NZDUSD pushed higher from yesterday’s lows of 0.5895 and CAD remains strong as well with oil prices still pushing higher. USDCAD drifted below 1.35 and 200DMA at 1.3464 is coming in view. AUDUSD was more subdued overnight but pushed higher to 0.6448 in the early Asian hours. USDCNH back close at 7.29 after being unable to go above 7.30 yesterday.

Commodities: Brent crude closed near a fresh 10-month high amid the supply constraints now spilling over to the refinery and diesel markets. Chatter on $100 oil continues to pick up, but we have little conviction that it would be sustainable. The approaching refinery maintenance season could reduce the demand for oil. Meanwhile, higher inflation could mean tighter monetary policies and OPEC+ cannot control the demand side. Gold momentum continued with XAUUSD back above $1930 despite higher 2yr yields with reports of China buying. Central bank meeting bonanza in the week ahead will be key.

Macro: ECB Vice President Luis de Guindos said that underlying inflation should continue to moderate, while Governing Council member Peter Kazimir implied that September’s interest-rate increase may be the final one of the cycle. ECB Villeroy said the ECB will keep interest rates at 4% for as long as needed to tame inflation, suggesting no further rate hikes but staying consistent with the higher-for-longer message.

In the news: Instacart prices shares at $30 as IPO market warms up (FT). PBOC Meets JPMorgan, Tesla to Vow Foreign Business Support (Bloomberg).

Macro events: RBA Minutes (Sep), Canada CPI (Aug) exp 3.8% YoY (prev 3.3%).

Company events: Soc Gen. shares declined by the most since March 2020 after the bank’s new strategic plan disappointed investors, while Nordic Semiconductor retreated after the chipmaker reduced quarterly revenue and margin forecasts.

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For a detailed look at what to watch in markets this week – read our Saxo Spotlight.

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