Global Market Quick Take: Asia – November 28, 2024

Key points:

• Macro: Oct PCE Index rose 0.2% and core PCE gained 0.3% as expected
• Equities: Nasdaq 100 underperformed, falling 0.85% ahead of Thanksgiving holiday
• FX: USD falls into pre-holiday trade
• Commodities: Gold is buoyed by the softening US dollar
• Fixed income: Treasuries continue to build on their gains

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Disclaimer: Past performance does not indicate future performance.

Macro:

• In October, the Personal Consumption Expenditures (PCE) Index, favored by the Fed as an inflation indicator, rose by 0.2% (2.3% yoy), while the core PCE gained 0.3% (2.8% yoy). These figures aligned with forecasts but have accelerated from the previous month, suggesting that we are further away from the Fed’s 2% goal.
• US economy expanded at 2.8% QoQ in Q3 as expected with jobless claims coming in at 213k, slightly lower than 215k consensus.

Equities: 

• US – S&P 500 lost 0.38% while Nasdaq 100 underperformed, falling 0.85% as tech names Autodesk and Workday fell 8.5% and 6.2% respectively. Autodesk reported earnings that were better than estimates but investors were concerned about decreasing margins.
• Hong Kong - HSI rose 2.3% on Wednesday, its second day of gains, driven by optimism about China's potential supportive policies. Traders expect the PBoC might cut the RRR again in December to aid economic recovery, following previous reductions in September and February.
• Japan - Nikkei 225 fell 0.8% on Wednesday, continuing their losses as the yen strengthened on speculation of a potential Bank of Japan interest rate hike next month.
• Earnings - NA

FX:

• USD declined in light pre-holiday trading as investors considered U.S. economic resilience and potential tariff war risks under President-elect Trump. This extended the reversal of the dollar's recent rally. Revised Q3 GDP data showed 2.8% growth, matching estimates and offering limited support for a Fed rate cut next month, though traders slightly increased the odds to 67%.
• JPY strengthened beyond 151.5 per dollar on Wednesday, its highest in over two weeks, driven by speculation of a potential December rate hike by the Bank of Japan. BOJ Governor Kazuo Ueda recently suggested a rate increase might be considered due to concerns about the JPY's weakness.

Commodities:

• Oil prices remained stable as trading slowed before the US Thanksgiving holiday, with attention on the OPEC+ meeting this weekend. West Texas Intermediate stayed below $69, while Brent crude was near $73. OPEC+ is expected to delay increasing production to address potential oversupply concerns next year.
• Gold posted small gains as the dollar weakened further after US data revealed an uptick in a key inflation indicator last month, reinforcing the expectation that the Federal Reserve will cautiously approach lowering interest rates.

Fixed income:

• Treasuries rose after US economic data, including the second estimate for third-quarter GDP and weekly jobless claims, were released. Gains were maintained following personal income and spending data but were disrupted by block sales in 10-year note futures. Options activity leaned towards hedges in anticipation of higher yields early next year.

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