Global Market Quick Take: Asia – December 22, 2023

US Equities: Stocks rebounded and recovered a large part of the selloff from the previous day. The S&P 500 rose by 1% to 4,747, and the Nasdaq100 added 1.2% to reach 16,757. Downward revisions on Q3 GDP and PCE deflators, along with a weak Philly Fed business outlook, lent support to rate cut anticipations. Micron surged by 8.6% after reporting results that beat estimates, lifting sentiment towards semiconductor names. Intel and Nvidia gained 2.9% and 1.8%, respectively. Carnival rose by 6.2% after the cruise line company reported a smaller quarterly loss and full-year guidance that beat estimates. In after-hour trading, Nike plummeted by more than 10%, shedding its full-year revenue growth guidance to 1% from the previously expected mid-single digit.

Fixed income: Treasury yields rebounded from their lows to finish the session modestly higher, with the 10-year yield settling at 3.88%. It had briefly dipped to 3.83% in response to downward revisions in GDP and quarterly PCE deflators. All eyes are now on the release of the November PCE deflators scheduled for today.

China/HK Equities: The Hang Seng Index was nearly flat to finish the session at 16,621. Local Hong Kong property stocks and shipping stocks gained, while new energy vehicle and pharmaceutical names weakened. In mainland bourses, the new energy space, including solar and energy storage, led a rally that lifted the CSI300 by 1% to 3,331. Food and beverage, electric equipment, and textile names advanced as well.

FX: The dollar weakened following economic data releases that reinforced expectations of a US rate cut. DXY, the dollar index, dropped by 0.6% to 101.84. USDJPY extended its slide by 1% to 142.10, while the AUD gained 1% to 0.68, and the EUR strengthened by 0.6% to 1.10 against the dollar. The November US PCE data, scheduled for later today, is the last significant piece of information that could potentially move the FX market before the start of the festive season.

Commodities: Crude oil prices declined after Angola announced its decision to leave OPEC, reflecting discontent among some oil-producing countries. The dissatisfaction arises from OPEC's, under the leadership of Saudi Arabia, persistent efforts to keep crude oil prices high, often at the expense of market shares. This has led to a loss of shares, primarily to US producers. Both Brent crude and WTI crude experienced a 0.4% decline, settling at $79.39 and $73.89, respectively.

Macro:

• US initial jobless claims increased to 205k from 203k (revised up from 202k) but was below the median projection of 215k. Continuing claims came in at 1,865k, also below the consensus.
• US Philadelphia Fed business outlook decreased to -10.5 in December, from -5.9 in November and much softer than the -3.0 median forecast. Capex intention plunged and was one of the key factors dragging down the index.
• On its third estimate, the US Q3 GDP was revised down to 4.9% from previous reported 5.2%. Personal consumption was revised down to 3.1% from 3.6%. Inflation was also lower than previously reported as the GDP deflator was revised down to 3.3% from 3.6% and the quarterly Core PCE deflator was lowered to 2.0% from 2.3%. 

Macro events:  US PCE deflator (Nov), US durable goods (Nov), US new home sales (Nov), U of Michigan consumer sentiment survey, France consumer confidence (Dec), France PPI (Nov), UK retail sales (Nov), UK current account (Q3), Japan national CPI (Nov), BoJ monetary policy meeting minutes (Oct)

In the news:

• Nike sinks 10% after it slashes sales outlook, unveils $2 billion in cost cuts (CNBC)
• Angola Quitting OPEC Is More Critical Than It Seems (Bloomberg)
• Carnival posts smaller loss, beats revenue estimates on steady cruising demand (Reuters)

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

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