Global Market Quick Take: Asia – January 03, 2025

Key points: 

• Macro: Labour markets still strong with initial jobless claims at 211k vs 222k expected 
• Equities: Tesla fell 6% due to delivery shortfall and Cybertruck incident 
• FX: USD strengthened after stronger than expected initial jobless claims 
• Commodities: Brent crude hit $76.4 on demand optimism, declining US stockpiles 
• Fixed income: US 10-year treasury yield holds at 4.55% 

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Disclaimer: Past performance does not indicate future performance. 

 Macro: 

• US initial jobless claims fell by 9,000 to 211,000 in the last week of 2024, the lowest in eight months, defying expectations of 222,000. Continuing claims dropped by 52,000 to 1,844,000, below forecasts. This tight labor market supports the Fed's ability to maintain higher interest rates if inflation persists. 
• The UK Nationwide House Price Index rose 4.7% year-on-year in December 2024, the fastest since October 2022, exceeding forecasts. Monthly growth was 0.7%. Upcoming stamp duty changes may cause early 2025 volatility, but recovery and easing rates are expected to support 2-4% growth by late 2025.
• China plans to tighten export restrictions on certain technology used to make battery components, including the processing of precious metals like gallium and lithium. 

Equities:  

• US - S&P 500 and Nasdaq both decreased by 0.2%, while the Dow Jones fell by 0.36% after an initial rally was reversed. The downturn was driven by declines in major tech stocks. 
• Tesla's Q4 2024 report showed 495,570 deliveries and 459,445 production, with annual deliveries at 1,789,226 and production at 1,773,443. This marked Tesla's first annual delivery drop from 1.81 million in 2023. Shares fell 6% as deliveries missed analyst expectations of around 504,770 and a Cybertruck incident.
• China - Chinese stocks fell, with the CSI 300 down 2.9% and HSI down 2.2%, due to disappointing factory activity data. A private survey showed slower-than-expected manufacturing growth in December, reflecting limited impact from Beijing's stimulus measures.
• Alibaba fell 1.3% to HK$81.30 after agreeing to sell its 78.7% stake in Sun Art Retail for HK$13.1 billion, resulting in a 13 billion yuan loss. Sun Art shares plunged 20% to HK$1.98.

FX: 

• DXY climbed to 109.4, the highest since October 2022, due to expectations of stronger U.S. growth and elevated interest rates. USDSGD rose to a 14-month high of 1.37.
• GBPUSD fell to an eight-month low of $1.239, driven by UK economic stagnation, a strong US dollar, and the Bank of England's dovish stance.  
• EURUSD declined to $1.029, its lowest since November 2022. Subdued growth in Germany and France, potential trade tariffs, and the ECB's dovish stance pressured the euro. 
• AUDUSD rose above $0.62, rebounding from two-year lows due to stronger commodity prices. USDDKK reached a 25-month high of 7.23. 

Commodities:  

• Gold increased 1.3% to $2,654 an ounce. The rally is driven by monetary easing, central bank buying, and geopolitical tensions. 
• Brent crude reached $76.4 per barrel, the highest since October, due to demand optimism and a sixth consecutive weekly decline in US stockpiles, with a 1.178 million barrel drop reported by the EIA. 
• US natural gas futures rose 3% to $3.7/MMBtu due to increased LNG export flows and forecasts for colder weather boosting heating demand. 

Fixed income: 

• The US 10-year Treasury yield stayed at 4.55%, below last week's 4.65%, as markets evaluated the Fed's policy. Hawkish FOMC signals led to pricing in two rate cuts for 2025, amid uncertainty about further cuts. Core PCE inflation rose slightly, and December's manufacturing contraction is expected. 

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