Mai hui MHmarkets: July 26, 2023 - Fundamental Reminder

☆TBD A new round of price adjustment window for domestic refined oil products has been opened

☆09:30 AUD Inflation Rate YoY (Q2)& AUD Inflation Rate YoY n.s.a(JUN)

☆22:00 USD Annualized New Home Sales(JUN)

☆22:30USD EIA Crude Oil Stocks Change (JUL/21)& USD EIA Strategic Crude Oil Stocks Change (JUL/21)

☆The next day at 02:00 Fed interest rate decision, 02:30 Fed Chairman Powell held a press conference, the market is expected to raise interest rates by 25 basis points, focus on Powell speech.

Market Overview

Review of Global Market Trend

Tuesday's US economic data is still full of contradictions, on the one hand, consumer confidence rose to a 2-year high, on the other hand, the Richmond Fed manufacturing activity continued to be sluggish in July, market sentiment is increasingly nervous, although this week's 25 basis point rate hike has long been priced in, but any subsequent guidance from Powell will set markets off. The dollar index fell after five straight gains, closing down 0.13 percent at 101.27.

Treasury yields rose across the board, and yields on the short end continued to rise more than those on the long end. The yield on the two-year Treasury note rose as high as 4.91% before closing near 4.88%; The yield on the 10-year Treasury note rose as high as 3.92 percent during the day before closing near 3.88 percent.

Spot gold turned higher on the eve of the Fed's big decision, regaining the $1,960 mark and closing up 0.51 percent at $1,964.74 an ounce. Spot silver recoup all of Monday's losses to close up 1.38 per cent at $24.68 an ounce.

Crude oil hit a three-month high, boosted by optimistic expectations of tighter supplies and higher demand. WTI crude oil briefly pushed above the $80 mark and closed up 0.52% at $79.29 a barrel. Brent crude rose as high as $83.49 a barrel before closing up 0.35 percent at $82.91 a barrel.

The three major U.S. stock indexes closed up, with the Dow Jones Industrial Average up 0.08 percent, the S&P 500 up 0.29 percent and the Nasdaq up 0.61 percent. Chinese stocks extended their gains, with the Nasdaq China Golden Dragon Index closing up 0.34%, with Pinduoduo leading its components higher with a more than 5% gain. Westpac Bancorp plunged 28% after it was reported to be in talks to be acquired by the California Bank. Spotify closed down 14% on its first day of trading. Google's key Q2 revenue and profit all beat expectations, sending shares up more than 7% in after-hours trading, while Microsoft's fourth-quarter growth in Azure and other cloud services slowed to 26%, with revenue topping expectations of $56.1 billion, before falling more than 4% in after-hours trading.

European stocks mostly closed higher, with Germany's DAX30 up 0.15%, Britain's FTSE 100 up 0.16% and Europe's Stoxx 50 up 0.21%.

Market Focus

1. ChatGPT for Android is available, but only in four countries.

2. The Russian State Duma passed a bill to raise the upper limit of compulsory military service to 30 years old.

3. Typhoon Doksuri made landfall early in the morning on Fuga Island in the Babuyan Islands in the northern Philippines.

4. The value of Saudi Arabia's oil exports fell 37.7% in May, according to Saudi government data.

5. Bank of California will acquire Westpac Bancorp in an all-stock transaction.

6. Saudi Arabia is said to be close to a deal with Freshwater Valley to sell 10 per cent of its base metals business.

7. IMF: Raised its 2023 global GDP growth forecast to 3% from 2.8%; Us growth forecast raised to 1.8%; The eurozone is expected to grow 0.9%; The economy is expected to grow 5.2%.

8. Google's Q2 revenue and profit exceeded expectations, leading to a surge of more than 7% in after-hours trading, while Microsoft's fourth-quarter growth in Azure and other cloud services slowed to 26%, with revenue topping expectations of $56.1 billion, leading to a decline of more than 4% in after-hours trading.

Geopolitical Situation

Conflict Situation

1. Ukrainian military administration: Russia launched air strikes on Kiev.

2. Russian Defense Ministry: Ukraine failed to successfully attack Russian Black Sea Fleet ships.

3. Russian Defense Ministry released a battle report on 25th local time, saying that Russian forces repelled the Ukrainian attack in several directions, striking Ukrainian command posts, ammunition depots, anti-artillery radars and other targets. The Russian Air Defense Forces also intercepted UAF Mi-24 helicopters, several Hymas rockets, and a number of drones.

4. According to the battle report issued by the General Staff of the Ukrainian Armed Forces, over the past 24 hours, the Ukrainian forces carried out a number of airstrikes on Russian positions of personnel and equipment and struck targets such as their electronic warfare systems and anti-aircraft missile systems, as well as intercepting Russian Ka-52 helicopters and a number of unmanned aerial vehicles.

Food Situation

1. The Kremlin says it is impossible to revive the lapsed Black Sea grain agreement at the moment.

2. According to RIA Novosti: Russia and the countries participating in this week's Russia-Africa summit will discuss Moscow's grain and fertilizer exports. Russia's Deputy Foreign Minister Sergei Vershinin said on Tuesday that there are no negotiations on resuming the Black Sea grain export agreement.

3. Britain's representative to the United Nations has said that the UK has information indicating that Russian forces may have begun attacking civilian ships in the Black Sea. British Prime Minister Sunak shared this information in a call with Zelensky on Tuesday.

4. EU agriculture commissioner: the eu will discuss subsidizing grain shipments (from Ukraine).

5. Secretary of the Security Council of Russia Patrushev: Sanctions against Moscow will have “catastrophic” consequences for the world grain market.

Energy Situation

1. The Council of the European Union adopted new rules requiring an 11.7% reduction in its final energy consumption by 2030.

2. Kazakhstan's Energy Minister: there are no problems with transportation of Kazakhstan's crude oil through Russia amid Black Sea tensions.

3. According to RIA Novosti: units 4 and 5 of the Zaporozhye nuclear power plant went into shutdown mode.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: Raised 3-month copper target to $9,250 per tonne (from $7,750 per tonne), raised 6-month copper target to $9,500 per tonne (from $9,200 per tonne), and maintained 12-month copper target of $10,000 per tonne. We see now as an opportunity to short nickel, maintaining our 3-month target ($19,000 per tonne) and 12-month target ($16,000 per tonne). Nickel prices are currently at the top of the industry's cost curve, which contradicts the supply constraints needed for the expected oversupply. The nickel market is expected to experience surpluses of 218,000 and 306,000 tons in 2023 and 2024, respectively.

02

SOCIETE GENERALE

SOCIETE GENERALE: BOJ's view that no action is needed for now shows their commitment to avoiding deflation.

03

MUFG

MUFG: USD JPY has retraced more than half of its losses as expectations of a YCC adjustment by the BOJ are dampened.