MHMarkets：March 27, 2024 Economic Highlights

Date: March 27, 2024

Economic Highlights (GMT + 8)

8:30am

AUDCPI y/y

Market Overview

Global Market Recap

On Tuesday, due to February's US durable goods orders growth exceeding expectations and an optimistic economic growth outlook for the first quarter in the US, the US dollar index initially fell but then rose, briefly touching below the 104 mark before recovering during the US trading session, closing up 0.07% at 104.29. The benchmark 10-year US Treasury yield remained above the 4.2% mark, closing at 4.237%, while the 2-year Treasury yield, most sensitive to Federal Reserve policy rates, closed at 4.593%.

Spot gold experienced a “roller coaster” market, significantly rising during the European session and briefly surpassing the $2200 mark before the US session but failed to hold this level, later retracting most of its gains to close up 0.33% at $2179.03 per ounce; spot silver ultimately closed down 0.88% at $24.46 per ounce.

Due to an unexpected increase in API crude oil inventories, oil prices fell, with WTI crude briefly reaching above $82 but then significantly dropping during the US trading session, closing down 0.84% at $81.22 per barrel; Brent crude closed down 0.9% at $85.24 per barrel.

US stocks saw declines, with the Dow Jones Industrial Average down 0.08%, the S&P 500 down 0.28%, and the Nasdaq down 0.42%. Apple (AAPL.O) fell 0.6%, Tesla (TSLA.O) rose 2.9%, Nvidia (NVDA.O) fell more than 2%, and Trump Media closed up 16% on its first day. The Nasdaq Golden Dragon China Index closed down 0.55%, with Alibaba (BABA.N) slightly up, while DouYu (DOYU.O) fell 9%.

European stocks rose across the board, with Germany's DAX30 up 0.67%; the UK's FTSE 100 up 0.17%; and the Stoxx Europe 50 up 0.4%.

Hong Kong stocks opened higher but then fluctuated lower, with technology stocks warming up in the afternoon driving the market upwards. The Hang Seng Index closed up 0.88% at 16618.32 points. The Hang Seng Technology Index closed up 1% at 3471.49 points. At close, the total turnover of the Hang Seng Index was HK$1086.52 billion (compared to HK$1127.09 billion in the previous trading session). In terms of sectors, real estate continued its upward trend, Tencent-related stocks strengthened, automobile stocks warmed up, water service stocks led the declines, and gold and precious metals sectors went down, with the Wuxi Biologics series adjusting. Among individual stocks, China Merchants Bank (03968.HK) rose 4.3%, Geely Automobile (00175.HK) rose 3.5%, Tencent Holdings (00700.HK) rose 3.7%, Baidu (09888.HK) rose 3.7%, Xiaomi Group (01810.HK) rose 3.2%, Sunny Optical Technology (02382.HK) fell 3.3%, and Wuxi Biologics (02269.HK) fell 3.3%.

A-shares fluctuated narrowly, with the Shanghai Composite Index up 0.17%, the Shenzhen Component Index up 0.28%, and the ChiNext Index up 0.44% by the close. Sector-wise, lithium battery concepts continued to soar in the afternoon, with stocks like United Creation Shares, Aulton, and Nebula Shares hitting the 20% limit up, along with more than ten other stocks reaching the limit up. The real estate sector continued to rise towards the end, with Jingtou Development, Dalong Real Estate, and others hitting the limit up. AI concept stocks continued to adjust, with Sora concepts leading the declines and Huayang Lianzhong hitting the limit down. Sectors like Xiaomi cars, aquaculture, nuclear pollution control, liquor, and banking were among the top gainers, while quantum technology, intellectual property, multimodal AI, short-form games, computing power leasing, and coal were among the losers. The majority of stocks in the Shanghai, Shenzhen, and Beijing markets fell, with over 2600 stocks declining.

Market Highlights:

· The Federal Reserve's operational losses in 2023 reached a record-breaking $114.3 billion.

· A bridge in Baltimore, USA, collapsed after being hit by a vessel.

· Director of the Russian Federal Security Service: The US, UK, and Ukraine are the masterminds behind the Moscow terrorist attack.

· Israel considers the current Gaza ceasefire negotiation talks to have reached a “dead end” and has recalled its negotiation representatives.

· Sources: OPEC+ is unlikely to change its production policy before the June meeting.

· Five Chinese nationals were killed in a terrorist attack in Pakistan; the Chinese embassy demands that the Pakistani authorities severely punish the culprits.

· The State Council's inter-departmental joint meeting on reducing corporate burdens: Efforts shall be made to significantly advance the reduction of business operation costs.

· The Ministry of Industry and Information Technology: Will moderately overbuild infrastructure such as 5G and computing power.

· To deal with the regularization of deposits, some banks' three-year and five-year deposit rates have “inverted.”

· Alibaba withdraws its IPO application for Cainiao.

Institutional Views:

1. Bank of America (BofA)

BofA's research highlights how G10 currencies differ in their reactions to shifts in the value of the CNY. This analysis reveals that the Australian Dollar (AUD) and the New Zealand Dollar (NZD) are especially susceptible to a decrease in the CNY's value. It also points out the distinctive situation of the Japanese Yen (JPY), influenced by carry trade activities in recent times. On the other hand, the Euro (EUR) appears to be comparatively unaffected by changes in the CNY, suggesting that it could be a strategic choice for investors keeping an eye on CNY movements.

2. Credit Agricole

Credit Agricole's analysis suggests a trend of moderate USD selling against a range of currencies, particularly highlighting the USD/SEK pair, as investors engage in month-end portfolio rebalancing. This insight allows investors and market players to foresee adjustments and tailor their investment strategies to align with the anticipated currency fluctuations as the month draws to a close.

3. Danske Bank

Danske Bank's analysis indicates a downward trend for the USD/JPY pair, attributed to anticipated changes in yield differentials and a global economic environment favoring JPY appreciation. The bank predicts a gradual decline in the value of this currency pair over the coming year, in line with wider predictions of relaxed monetary policies by leading central banks and weaker global economic indicators.

4. Goldman Sachs

Goldman Sachs views the Bank of Japan's shift away from negative interest rates as a significant move in its monetary policy approach. However, the firm predicts this change will have only a slight effect on the Japanese Yen in the near term. Goldman Sachs' revised predictions for the USD/JPY exchange rate suggest a persistent strength of the USD against the JPY, influenced by a mix of global economic trends and policy changes in both Japan and the United States.

5. ING

ING maintains a long-term bearish outlook on the USD/JPY, primarily due to the expectation of declining US interest rates. However, the bank also recognizes the potential for a short-term surge towards the 152+ level, which historically has been a trigger for intervention. This immediate forecast accounts for the complex interaction of market volatility, carry trade dynamics, and policy measures, which together might push the USD/JPY to revisit levels that previously led to verbal warnings from Japanese authorities.