MHMarkets：March 25, 2024 Economic Highlights

Date: March 25, 2024

Economic Highlights (GMT + 8)

No High-Impact Event

Market Overview

Global Market Recap

Last Friday, as the market began to consider the possibility of the Federal Reserve delaying rate cuts, the U.S. dollar index continued to strengthen, closing up 0.44% for the second consecutive week at 104.42. The benchmark 10-year U.S. Treasury yield fell below the 4.2% level, closing at 4.194%, while the 2-year U.S. Treasury yield, most sensitive to Fed policy rates, closed at 4.596%.

Under pressure from a strong dollar, spot gold continued its decline, briefly falling below the $2160 mark, ultimately closing down 0.72%, but still ended the week up 0.44% at $2168.48 an ounce; spot silver closed down 0.29% at $24.68 an ounce.

With the potential for a ceasefire in Gaza and the continued reduction in the number of U.S. drilling platforms, oil prices were stable last week. WTI crude briefly surged to $81 per barrel before the U.S. session but then gave up all gains, closing down 0.01% at $80.74 per barrel; Brent crude closed down 0.02% at $85.52 per barrel.

The Dow Jones Industrial Average closed down 0.77%, the S&P 500 down 0.14%, and the Nasdaq up 0.16%, continuing to set new closing highs. Tesla (TSLA.O) narrowed its losses to close down 1.15%. The Nasdaq Golden Dragon China Index fell 1.8%, with Lufax (LU.N) down 9%, Xpeng Motors (XPEV.N) nearly 8%, and Weibo (WB.O) 5%.

European stocks were mixed, with Germany's DAX30 up 0.15%, the UK's FTSE 100 up 0.61%, and the Euro Stoxx 50 down 0.42%.

Hong Kong stocks opened lower and continued to fall, with the Hang Seng Index opening down 117 points at 16745, then plummeting, dropping over 500 points to 16387 at one point. The afternoon session saw a slight narrowing of losses, but the market remained weak. The Hang Seng Index closed down 2.16%, the Technology Index down 3.55%, with total trading volume reaching HK$135.65 billion. Pharmaceuticals, medical outsourcing, and logistics stocks led the declines, with significant drops in dairy and tech stocks pulling down the market. Oriental Overseas International (00316.HK) fell nearly 17%, JD Health (06618.HK) over 12.5%, Li Auto (02015.HK) over 10%, Bilibili (09626.HK) over 9%, and XPeng Motors (09868.HK), WuXi Biologics (02269.HK) over 8%, Alibaba Health (00241.HK) over 7%; Trip.com Group (00780.HK) rose nearly 2.5%, Kingsoft (03888.HK) nearly 1%.

A-share markets weakened, with AI application concept stocks soaring; by the close, the Shanghai Composite was down 0.95%, the Shenzhen Component Index down 1.21%, and the ChiNext Index down 1.47%. The media and entertainment sector surged, with Century Tianhong, Reader Culture, and Huace Film & TV hitting the 20% limit up; computing power rental concepts also soared, with Runze Technology and AoFei Data hitting the 20% limit up; storage chip concepts strengthened, with Xice Testing, Kangqiang Electronics hitting the limit up; most sectors declined, with low-altitude economy concepts leading the falls, Xianheng International, Yongyue Technology among others hitting the limit down; seed industry, gold concept, lithium mining, semiconductor, non-ferrous, pharmaceuticals, etc., were among the top losers. Over 4200 stocks fell across the market, with transaction volumes exceeding 1 trillion yuan.

Institutional Views:

1. Bank of America (BofA)

The future trajectory of the EUR/USD pairing is muddled by competing narratives, rendering a definitive forecast difficult. Amidst variability and differing perspectives on economic fundamentals and the influence of policies, equilibrium projections hint at a relatively steady outlook for the EUR/USD, maintaining above 1.20. Therefore, both investors and analysts are advised to carefully tread through the intricate interplay between the EUR and USD, recognizing the likelihood of sustained departures from the equilibrium rate due to persistent global economic and geopolitical ambiguities.

2. Credit Agricole

Following the March FOMC meeting, USD traders are navigating a complicated environment. The detailed insights from the Fed's forecasts and modifications to the dot plot hint at an economic outlook that is more balanced or possibly cautiously hopeful than first thought. In light of this, alongside the usual seasonal patterns seen in April, Credit Agricole recommends a tactical move to purchase USD during dips. This approach is based on the expectation of market realignments and the chance to profit from shifting market sentiments.

3. Danske Bank

The unexpected rate cut by the Swiss National Bank (SNB) and its effects on inflation predictions and foreign exchange intervention policies suggest a short-term upward movement in EUR/CHF. Despite the market's initial response, Danske Bank holds to its forecast for further rate cuts from the SNB, anticipating a steady decrease in the policy rate to 0.75% by the end of the year. This recent decision marks a tactical pivot that may pave the way for an elevated EUR/CHF in the upcoming period.