MHMarkets：March 21, 2024 Economic Highlights

Date: March 21, 2024

Economic Highlights (GMT + 8)

4:15pm

EURFrench Flash Manufacturing PMI

EURFrench Flash Services PMI

4:30pm

CHFSNB Monetary Policy Assessment

CHFSNB Policy Rate

EURGerman Flash Manufacturing PMI

EURGerman Flash Services PMI

5:00pm

CHFSNB Press Conference

5:30pm

GBPFlash Manufacturing PMI

GBPFlash Services PMI

8:00pm

GBPMonetary Policy Summary

GBPMPC Official Bank Rate Votes

GBPOfficial Bank Rate

8:30pm

USDUnemployment Claims

9:45pm

USDFlash Manufacturing PMI

USDFlash Services PMI

Market Overview

Global Market Recap

On Wednesday, following the Fed's interest rate decision, bets on interest rate cuts increased, causing the U.S. dollar index to plummet, closing down 0.40% at 103.4. The benchmark 10-year U.S. Treasury yield ended at 4.2730%, and the 2-year yield, most sensitive to Fed policy rates, closed at 4.6040%.

Bitcoin strengthened continuously after the Fed's interest rate decision, returning above the $67,000 mark, with a 9.03% increase to $67,628 by 5:30 today.

Due to renewed expectations for Fed rate cuts and a weakening U.S. dollar, spot gold surged, approaching the $2,190 mark, and closed up 1.32% at $2,185.80 per ounce; spot silver ended up 2.71% at $25.57 per ounce.

Concerns about demand continued to pressure oil prices, with WTI crude closing down 1.31% at $81.36 per barrel, and Brent crude ending down 1.19% at $86.13 per barrel.

U.S. stock indices ended higher across the board, with the Dow up 1.03%, the S&P 500 up 0.89%, and the Nasdaq up 1.25%, all setting new closing highs. Astera (ALAB.O) surged 73.42% on its first trading day, nearing a market value of ten billion dollars. Pinduoduo (PDD.O) initially jumped 15%, closing up 3.52%. The Nasdaq Golden Dragon China Index ended up 1.65%, with Tencent Music (TME.N) up 5.8%, iQIYI (IQ.O) up 5.32%, and ZTO Express (ZTO.N) up 4.29%.

European stocks ended mixed, with Germany's DAX 30 up 0.15%, the UK's FTSE 100 down 0.01%, and the Stoxx Europe 50 down 0.15%.

The Hang Seng Index opened up 29 points at 16,559, later fluctuating and briefly dipping over a hundred points to a low of 16,430, but gradually rebounded in the afternoon. At the close, the Hang Seng was up 0.08%, and the Tech Index was up 0.65%, with total turnover at HK$85.3 billion. Sectors such as entertainment, publishing, and aviation logistics strengthened, while domestic retail, catering, and agricultural products saw declines.

The A-share market fluctuated narrowly, with the Shanghai Composite showing strength. At close, the Shanghai Composite was up 0.55%, the Shenzhen Component up 0.21%, and the ChiNext Index up 0.12%. Sectors such as Sora concepts, short drama games, and low-altitude economy strengthened, while very few sectors like liquor production and cultivated diamonds saw declines. Over 3,700 stocks advanced, with transaction volume nearing RMB 1 trillion.

Market Highlights:

· The Federal Reserve maintains the benchmark interest rate between 5.25% and 5.50%.

· Powell states that slowing down the balance sheet reduction is appropriate in the near future.

· Nikkei News: The Bank of Japan may consider its next interest rate hike in July or October.

· Market News: The U.S. Department of Justice will file an antitrust lawsuit against Apple.

· Musk's brain-computer interface company enables the first patient to play chess using thought.

· Xi Jinping: Solidly promote the rise of the central region from a higher starting point.

· Tencent Holdings plans to at least double its share repurchase program.

· Pinduoduo's revenue in the fourth quarter of last year increased by 123% year-over-year.

Institutional Views:

1. Bank of America (BofA)

The upcoming policy decision from the Bank of England is expected to take a careful and consistent route, with few changes on the horizon. The British pound, which has shown strength and gained from advantageous carry trades, looks set to maintain its momentum into the favorable month of April. Even with recent market adjustments, the positive sentiment surrounding the GBP is still strong, bolstered by an increasingly hopeful economic forecast for the UK.

2. Credit Agricole

Credit Agricole suggests that now is an opportune time to buy USD, ahead of the Federal Reserve's decision. They expect that the central bank's forecasts and Chair Powell's remarks might veer towards a careful, less accommodative approach. This anticipated pivot, along with the USD's current undervaluation against its interest rate benefit, primes the currency for a possible appreciation. Especially if the outcome of the meeting cools investor enthusiasm for risk, this could further fuel a recovery in the dollar's value.

3. CIBC

The Federal Reserve's latest decision and projections emphasize a prudent strategy towards monetary loosening, showcasing a positive outlook on economic expansion and a tactical approach to managing inflation. CIBC points out the Fed's responsiveness to changing economic conditions, indicating a careful and calculated journey towards meeting long-term inflation goals while maintaining overall economic stability.

4. MUFG

The Federal Open Market Committee's (FOMC) decision today marks a pivotal moment for the yen, possibly affecting Tokyo's approach to countering undue weakness in the JPY. Analysis from MUFG indicates that a neutral decision might curb sharp increases in the USD, whereas an unexpectedly stringent stance could lead to considerable weakening of the yen, potentially triggering Tokyo to step in. This situation highlights the delicate equilibrium that central banks strive to maintain in impacting foreign exchange markets during worldwide adjustments in monetary policies.