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Global Market Quick Take: Asia – September 5, 2023
APAC Research
Summary: Quiet overnight markets with US and Canada closed for Labor Day holiday. Asia’s positive momentum on the back of China’s broadening stimulus announcement also faltered and European indices closed in minor red. China’s Caixin services PMI and Reserve Bank of Australia meeting eyed in Asia today and whether more AUD gains are likely. Crude oil remains a huge focus with Brent breaking out.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
US Equities: The cash equity market was closed in observance of the Labor Day holiday. Index futures were unable to hold gains driven by Asian market rally and ended the shortened session (closed at 1pm New York time) mixed.
China/HK Equities: Following a typhoon-interrupted week, Hong Kong's equity market responded to mainland China's recent property market regulatory changes. This spurred a long-awaited surge in sentiment, propelling both the Hong Kong and mainland Chinese equity markets forward. The Hang Seng Index surged by 2.5%, driven by gains in China's property and materials sectors, while the CSI300 advanced by 1.5%. Notably, overseas investors shifted from a week-long net selling trend to a net purchase of RMB6.9 billion in Northbound flows. Although individual regulatory changes may not cause significant market shifts, the combined impact of several rapid adjustments sends strong signals. This suggests the potential for a sustained rally in both Hong Kong and mainland Chinese equity markets in the near term.
FX: Quiet markets with Labor Day holiday in US and Canada on Monday. USDJPY breaking back above 146.50 in early Asian hours this morning from lows of 144.45 on Friday post-NFP but intervention threat looms. GBPUSD made its way above 1.26 as BOE rate hike remains priced in, with EURUSD still struggling at 1.087 as Lagarde didn’t give any clear signals on the next ECB meeting. AUDUSD stays close to 0.6460 with RBA meeting and China measures in focus – read our FX Watch for more.
Commodities: Brent oil breaking out of recent range as it closes in on $90/barrel amid supply concerns with traders awaiting announcement from Russia and Saudi Arabia, with oil inventories also in focus again this week after last week’s drawdowns. Meanwhile, Chevron launched mediation talks with Australian LNG facilities workers but strike threats continued if a pay deal isn't reached.
Fixed income: The cash Treasury market was shut due to a public holiday. Futures extended last Friday’s selloff in thin trading as the USD45 billion plus heavy corporate issuance calendar looms this week.
Macro: ECB President Lagarde was on the wires yesterday and said that critical for central banks to keep inflation expectations firmly anchored while these relative price changes play out. She stayed away from giving any signals on policy action at the Sept ECB meeting. Current market pricing is for a one in four chance of a rate hike.
In the news: Chinese electric carmakers ramp up push overseas, setting up clash with U.S., European auto giants – via CNBC.
Macro events: Reserve Bank of Australia (12:30pm SGT) could keep rates unchanged, but will it keep the door open for more rate hikes ahead – read full preview in Saxo Spotlight.
Earnings events: Zscaler (after market, Adj EPS est. USD 0.493); Ashtead (before market, Adj EPS est. GBP 0.826/USD 1.051)
For all macro, earnings, and dividend events check Saxo’s calendar.
For a detailed look at what to watch in markets this week – read our Saxo Spotlight.
For a global look at markets – tune into our Podcast.
For thematic discussions on developments affecting your portfolio – watch our The Curious Investor videos.
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