Mai hui MHmarkets: July 17, 2023 - Fundamental Reminder

☆Tentative Time  G20 Finance Ministers and Central Bank Governors Meeting

☆ 10:00 CNY GDP Growth Rate YoY (Q2) & CNY Total Retail Sales of Consumer Goods YoY (JUN) & CNY Industrial Added Value Above Designated Size YoY (JUN)

☆ 16:15 EUR ECB President Lagarde Speech

☆ 20:30 USD NY Empire State Manufacturing Index (JUL)

Market Overview

Review of Global Market Trend

Last Friday, the University of Michigan released the preliminary value of July U.S. consumer confidence climbed more than expected, which was a record high since September 2021, but also the largest year-on-year increase since 2006. Influenced by the strong data, the dollar index accelerated its rebound, once back above the 100 mark, but closed up 0.19% at 99.96 after losing the mark again.

U.S. bond yields rebounded after two consecutive days of decline, the 10-year U.S. bond yields rose from 3.77% to 3.83% during the day, the two-year U.S. bond yields rose more, from 4.65% to 4.77% during the day.

Spot gold by the dollar index and the rise in U.S. bond yields suppressed, once close to lose the $1950 mark, after five days of gains closed down 0.27% at $1955.43 per ounce; spot silver failed to hold the 25 mark, but still closed up 0.24% at $24.94 per ounce.

Crude Oil in a row after three days of gains ushered in the adjustment, the U.S. stock market early in the session, a large number of selling, WTI crude oil once fell to $75.06 per barrel, closed down 2.51% at $75.22 per barrel; Brent crude oil lost $80 off, closed down 2.34% at $79.53 per barrel.

Major U.S. stock indexes were mixed, with the Dow closing up 0.33%, the Nasdaq closing down 0.18%, and the S&P 500 closing down a modest 0.06%. Bank stocks were soft, with Citigroup down 4% and Bank of America down nearly 2%. Top Chinese stocks retreated, with Alibaba down 2%, Pinduoduo down more than 1.7% and Jingdong down more than 3%. Last week, the S&P 500 accumulated 2.43%, the Dow accumulated 2.30% and the Nasdaq accumulated 3.32%.

The major European stock indexes diverged, Germany's DAX30 index closed down 0.21%, Britain's FTSE 100 index closed down 0.07%, Europe's Stoxx 50 index closed up 0.2%.

Market Focus

1. World Meteorological Organization: hot weather may continue into August.

2. Musk says Tesla is working on its own chips, which will never be called GPU or H100s.

3. Turkey decides to triple fuel tax in order to cover huge losses caused by the earthquake.

4. The upcoming G20 finance meeting will issue a guidance note on cryptocurrencies, sources say.

5. Israeli Prime Minister Benjamin Netanyahu has been released from the hospital after a medical assessment showed that he fainted due to dehydration from the heat, the country is experiencing extreme heat.

6. Sony and Microsoft have reached a “binding agreement” to keep Call of Duty on PlayStation.

Geopolitical Situation

Conflict Situation

1. Ukrainian Commander-in-Chief admits for the first time that Ukrainian troops attacked the Russian border.

2. Russian official: Ukraine shelled border towns, resulting in one death.

3. Ukrainian deputy defense minister: fighting has intensified in the east, Ukrainian troops are on the defensive.

4. Russian defense ministry: over the past day, Russian troops repelled 15 attacks by Ukrainian forces in the direction of Donetsk.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs Strategist: Soaring Stocks Are Facing Ongoing Risks】

July 14 -- The current rally in global stock markets suggests that inflation and recession risks are behind us. But strategists at Goldman Sachs are more skeptical. Strategist Christian says the risk of a U.S. recession remains high, and inflation could get trickier from now on and trigger hawkish surprises from central banks. He added that we expect global equities to remain in a “rich and stable” range from now on. Low risk premiums and relatively weak earnings growth limit the potential for further gains. Goldman Sachs strategists say a big risk for the second half of the year is the impact of slower global growth on earnings revisions. They kept their asset allocation to equities neutral, while upgrading bonds to neutral from underweight. They downgraded their recommendation on commodities to neutral for the next three months, but maintained their hold rating for the next 12 months.

02

SOCIETE GENERALE

Societe Generale: For EURUSD to move back above 1.10, the USD CPI MoM may need to fall to 0.2%.

03

MUFG

MUFG: Non-farm payrolls data won't make Fed more hawkish in the second half of the year.