Global Market Quick Take: Asia – November 27, 2024

Key points:

• Macro: Israel has entered into a 60-day ceasefire agreement with Hezbollah
• Equities: CrowdStrike is down 6.2% after hours on weaker Q4 outlook
• FX: USD edges higher as Fed minutes shows cautious approach to rate cuts
• Commodities: Gold and Silver hold gains after FOMC
• Fixed income: Fed officials weigh RRP reduction

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Israel has entered into a 60-day ceasefire agreement with Lebanon's Hezbollah, following negotiations facilitated by the United States.
• President-elect Trump’s transition team is preparing to announce Jamieson Greer as the US Trade Representative. Greer, who served as chief of staff to Robert Lighthizer—Trump's US Trade Representative during his first administration and the person responsible for overseeing billions in tariffs on various countries—will now manage the implementation of Trump's tariff plans.

Equities: 

• US - S&P 500 and Dow Jones both hit new record highs, with the S&P 500 gaining 0.6% and the Dow rising by 118 points. Dell fell 11% in after hours trading as they reported revenue that missed estimates and provided guidance for the current quarter that is below consensus.
• CrowdStrike is down 6.2% in after-hours trading as 4^th quarter outlook missed expectations. This is despite reporting strong Q3 revenue and earnings that beat estimates, with revenue growing 29% y/y.
• Hongkong - HSI closed pretty much flat on Tuesday after three days of declines. Gains in property and financial sectors balanced out losses in technology and consumer stocks. Investors considered reports that US President-elect Donald Trump intends to impose an extra 10% tariff on all Chinese imports.
• Earnings: N/A

FX:

• USD Index hit a high of 107.50 on Tuesday as traders reacted to FOMC minutes and Trump's tariff threats. The Fed showed caution on rate cuts, with a 60% chance of a 25bps cut next month. Trump's announcement of new tariffs on Chinese, Mexican, and Canadian goods initially caused market volatility and boosted the dollar, but traders later downplayed these concerns, awaiting more details.
• CAD dropped nearly 1% to over 1.41 per USD, its lowest since mid-2020, after Trump's tariff threats. Canada's key exports to the US are energy and vehicles. The Bank of Canada may cut rates next month, but a 50bps cut is less likely after core inflation rose to 2.6% in October.
• MXN fell more than 2% above 20.7, weakest since March 2022 due to threats of tariffs. MXN has weakened approximately 20% this year as the left wing won the Presidential election and central bank ramped up easing measures.

Commodities:

• Gold held at $2,630 as Fed minutes showed confidence in easing inflation and a strong labor market, hinting at gradual rate cuts. Silver traded above $30.4.
• WTI crude traded around $69 as Lebanon-Israel tensions eased. Prices faced pressure from a stronger US dollar but were supported by Russia-Ukraine tensions and Iran's nuclear plans. Brent crude held around $73.
• Copper futures fell below $4.05, hitting an 11-week low as the US dollar rebounded. Over the past 4 weeks, copper dropped 6.46%, but it has risen 7.94% over the last 12 months.

Fixed income:

• Treasury yields increased by 1 to 3 basis points, particularly in intermediate-term securities, steepening the 2s10s yield curve. The market largely ignored strong 5-year note auction results and Fed minutes indicating support for gradual rate cuts.
• The FOMC minutes prompted money market activity, widening the one-month SOFR-fed funds spreads after discussions of a potential 5 basis point cut to the overnight RRP rate.

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