Global Market Quick Take: Asia – February 17, 2025

Key points:

• Macro: US retail sales fell 0.9%, affected by California wildfires
• Equities: US mixed on Friday but weekly, the S&P up 1%, Dow 0.3%, and Nasdaq 1.7%.
• FX: Yen gains on strong GDP figures
• Commodities: Oil and Gold fell but Natural Gas rose
• Fixed income: Treasuries rose on weak retail sales

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Disclaimer: Past performance does not indicate future performance.

Macro:

• US retail sales dropped 0.9% in January 2025, the largest decline since March 2023, due to severe weather and LA fires. Sporting goods stores saw the biggest drop at -4.6%, while gasoline stations and food services rose by 0.9%. Sales used for GDP calculation fell by 0.8%.
• Japan's GDP grew by 0.7% quarter-on-quarter in Q4 2024, up from a revised 0.4% in Q3, surpassing market expectations of 0.3%, according to preliminary data. This marks the third consecutive quarterly increase.
• China's current account surplus hit a record $180.7 billion in Q4 2024, up from $56.2 billion the previous year and $148 billion in Q3. The goods account surplus surged to $249.6 billion due to slowed domestic consumption and increased production capacity, leading manufacturers to depend on foreign consumers.

Equities: 

• US - U.S. stocks showed mixed performance on Friday: S&P 500 remained mostly flat, the Nasdaq rose 0.4%, and the Dow fell 165 points. January retail sales dropped 0.9%, the biggest decline in a year, sparking concerns about consumer spending. Despite a volatile week with policy changes, including new tariffs and Ukraine peace talks, markets were stable. A delay in reciprocal tariffs aided stocks in posting weekly gains, led by tech, while Consumer Staples and Health lagged. Airbnb surged 14.4% on strong earnings, GameStop rose 2.6% on bitcoin speculation, Moderna gained 3.3% despite a large loss, and Eli Lilly fell 3%. Weekly, the S&P rose 1%, Dow 0.3%, and Nasdaq 1.7%.
• EU - European stocks fell on Friday after record highs but ended the week up, driven by peace prospects in Ukraine and U.S. tariff concerns. The STOXX 50 dropped 0.2% to 5,488, and the STOXX 600 fell 0.3% to 552. Healthcare and insurers, including Allianz and AXA, led declines, while Hermes rose 1% on strong sales. Weekly, the STOXX 50 gained 3% and the STOXX 600 increased by 1.5%.

Earnings this week

• Monday: Transocean, Noble, UFP Industries, JELD-WEN, Huntsman
  Tuesday: Baidu, Arista, Oxy, Devon, Toll Brothers
  Wednesday: Etsy, SolarEdge, Garmin, Wix, Fiverr
  Thursday: Alibaba, Walmart, Unity, Wayfair, Newmont
  Friday: Mercado Libre, Rivian, Block, Booking Holdings, Texas Roadhouse

FX:

• The yen rose against all its G10 peers after Japan's GDP exceeded expectations, suggesting possible Bank of Japan rate hikes. USDJPY dropped 0.3% to 151.91. The Bloomberg Dollar Spot Index stabilized after last week's 1% decline, with U.S. cash Treasuries closed for a holiday.
• AUDUSD held steady at 0.6350, marking a second weekly rise, with short-term resistance expected at the 100-DMA.
• EURUSD fell 0.1% to 1.4086 as Europe plans increased defense spending amid President Trump's push to end the Ukraine conflict.
• NZDUSD slipped 0.1% to 0.5919, with the 100-day moving average offering a potential level for traders ahead of the February 19 RBNZ rate decision.

Commodities:

• WTI crude fell $0.55 (0.77%) to $70.74 per barrel, while Brent crude dropped $0.28 (0.37%) to $74.74 per barrel. Gold dipped below $2,900 per ounce after hitting $2,940, influenced by global demand and US-Russia ceasefire talks. US natural gas futures rose to $3.7/MMBtu, driven by increased LNG exports, lower output, and colder weather forecasts.

Fixed income:

• Treasuries closed Friday with yields near the week's earlier lows, as January retail sales fell short of expectations despite upward revisions for December. Intermediate sectors led the gains, with the 2s5s30s fly gaining around 2bp. Yields across maturities dropped below their 50-day averages, with most closing beneath trendlines. 10-year yield was about 5bp lower at approximately 4.48%, within a weekly range of 4.445%-4.658%. Meanwhile, UK and German yields rose by about 1bp.

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