Global Market Quick Take: Asia – December 21, 2023

US Equities: Stocks finally retreated and consolidated after a two-week streak of gains as investors booked profits, despite a large fall in Treasury yields, stronger consumer confidence, and housing data. The S&P 500 and Nasdaq 100 each declined by 1.5% to 4,698 and 16,554, respectively. Tesla plunged 3.9% after Bloomberg reported that the EV maker is not giving employee merit-based stock grants this year. FedEx plummeted 12% after reducing revenue guidance. General Mills declined 3.6% after the food company reported revenue for the last quarter, missing estimates, and trimmed full-year sales forecasts. Bucking the broad market declines, Alphabet gained 1.2% on a report that Google is planning to revamp its advertising-sales unit. In after-hours trading, Micron Technology surged around 5% after it reported earnings and revenues beating analyst estimates.

Fixed income: Treasuries rallied, with yields falling across the yield curve. The 10-year yield, down 8bps to 3.85%, reached levels last seen in July. Meanwhile, the 2-year yield dropped by 11bps to 4.33%. This move was triggered by the 12bp drop in the 10-year UK Gilt yields following an unexpected 0.2% month-on-month contraction in the U.K. CPI.

China/HK Equities: The Hang Seng Index bounced 0.7%, led by Macao casino stocks in anticipation of robust gaming revenues during the holiday season. China Internet names also rallied. However, the CSI300 slid 1.1%, dragged down by media, computing, and appliances. Investors' sentiments remain fragile.

FX: Despite the sharp fall in Treasury yields, USDJPY fell only moderately by 0.2% to 143.57. The Pound Sterling plunged on softer CPI data, with GBPUSD declining 0.7% to 1.2639. AUDUSD weakened to as low as 0.6724, trading at 0.6744 as of writing.

Commodities: Crude oil extended its rally, with Brent crude rising 0.6% to $79.70 and the WTI crude added 0.4% to $74.22. Iron ore gained 1.2% to $133.9.

Macro:

• U.S. Conference Board consumer confidence jumped to 110.7 in November from 102.0 in October, surpassing 104.5 projected in consensus estimates.
• U.S. existing home sales increased 0.8% M/M to 3.82 million, higher than 3.78 million expected. Supply of existing homes remains tight at 3.5 months.
• U.K. CPI unexpected dropped by 0.2% M/M in November versus consensus +0.1%. On a year-on-year basis, CPI growth slowed to 3.9% in November from 4.6% in October, below 4.3% expected. Core CPI slowed to 5.1% Y/Y from 5.7% vs median estimate 5.6%.
• As expected, China’s major banks kept their 1-year and 5-year loan prime rates unchanged at 3.45% and 4.20% respectively.

Macro events:  U.S. jobless claims, U.S. GDP (Q3, 3^rd estimate), Philadelphia Fed business outlook (Dec), U.S. 5-year TIPS auction, France business confidence (Dec), Hong Kong CPI (Nov).

Earnings: Nike, Cintas, Carnival

In the news:

• Tesla Skips Merit-Based Stock Awards, Squeezing Compensation (Bloomberg)
• Google Plans Ad Sales Restructuring as Automation Booms (The Information)
• Micron revenue forecasts strong recovery, shares jump (Reuters)
• Tesla blamed drivers for failures of parts it long knew were defective (Reuters)

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

For a global look at markets – go to Inspiration.