MHMarkets：September 18, 2023 - Fundamental Reminder

☆22：00 USD NAHB Housing Market Index (SEP)

☆Closing reminder：The Tokyo Stock Exchange will be closed for the Aged Day.

Market Overview

Review of Global Market Trend

On last Friday, the dollar index hovered around the 105 mark before ending down 0.01% at 105.33, notching its ninth straight weekly gain. In terms of US Treasury yields, the two-year US Treasury yield fell first and then rose, rising to an intraday high of 5.054% before closing at 5.037%. The yield on the 10-year Treasury climbed back above 4.3% to end at 4.336%.

Spot gold recovered sharply, peaking as high as $1,930 in U.S. trading and rising more than $20 from the day's low before giving up some gains to end up 0.69% at $1,923.88 an ounce. Spot silver climbed back above the $23 mark and ended up 1.7% at $23.03 an ounce.

Oil was on a roller-coaster ride, with WTI crude briefly falling below $90 and hitting an intraday low of $89.19 before recovering all its losses to end up 0.56% at $91.17 a barrel. Brent crude settled up 0.14% at $94.20 a barrel.

The Dow Jones Industrial Average closed down 0.83%, the Nasdaq index closed down 1.56%, the S&P 500 index closed down 1.22%, the semiconductor sector under pressure, AMD, Arm fell more than 4%, Nvidia fell more than 3%, TSMC fell more than 2%, residential construction, charging pile sector led the decline.

European stocks closed higher across the board, with Germany's DAX30 up 0.56%, Britain's FTSE 100 up 0.5% and Europe's Stoxx 50 up 0.36%.

Market Focus

1. Kim Jong-un ends his visit to Russia.

2. A 21% pay increase rejected: the U.S. auto union entered its third day of strike.

3. The governments of Brazil and Bolivia are preparing to sign a memorandum of understanding to jointly invest in the lithium industry.

4. Australian Union representation: Members shut down work for another 24 hours at Chevron's Australian LNG plant.   

Geopolitical Situation

Conflict Situation

1. Russian Ministry of Defense: The Russian army repelling several Ukrainian attacks in Zaporizhzhia, Donetsk, Luhansk and other directions, hitting Ukrainian personnel and military equipment, and destroying a Bradley infantry fighting vehicle. Russian forces also hit the command posts of Ukraine's 100th Territorial Defense Brigade and 67th Mechanized Brigade in the Donetsk region. In addition, Russian air defenses intercepted several aerial bombs and anti-radar missiles. Russian air defense systems destroyed four more Ukrainian fixed-wing drones over the northwest and east coast of Crimea. The mayor of Moscow, Russia: The drone was shot down in Moscow's Ramenskoye district.

2. General Staff of the Ukrainian Armed Forces: In the past 24 hours, Ukrainian forces have continued fighting with Russian forces in the direction of Bakhmut and Malinka, launching air strikes against Russian personnel and equipment positions, and using missiles to hit Russian air defense missile systems, ammunition depots, electronic warfare systems and other targets. In addition, Ukrainian air defense forces also intercepted a number of Russian air targets.

3. Russian Foreign Minister Sergei Lavrov: The United States is controlling the conflict between Russia and Ukraine. The United States is waging war against Russia by providing weapons, ammunition, intelligence information and satellite data to Ukraine.

4. Secretary of State Blinken discussed the Black Sea Food Initiative and Ukraine with UN Secretary-General Antonio Guterres.

5. Russian Ambassador to the United States: The United States should take practical measures to remove obstacles to the resumption of the agreement on agricultural exports from Black Sea ports.

6. Russian media: The United States bought $944 million of Russian fertilizer in the first seven months of this year, a new record.

7. The first civilian ships headed to Ukrainian ports after the termination of the Black Sea agricultural export agreement.   

Institutional Perspective

01

Goldman Sachs

Goldman Sachs：Upside trading opportunities are expected through the end of the year, maintaining the overallocation of Chinese stocks.

02

SOCIETE GENERALE

【SOCIETE GENERALE：A dovish ECB rate hike could raise the need for further hikes】

September 15 - The direct impact of the European Central Bank's dovish rate hikes on long-term yields and the euro could mean a more delayed return to price stability, which would instead raise the need for further rate hikes, Societe General said. We do not expect the ECB to raise rates again this year, but we continue to believe that risks to inflation are mainly to the upside, with high unit Labour costs leading to persistently higher core inflation, which the ECB may need to address by raising rates next year.

03

MUFG

【MUFG：Markets are betting the Fed will focus on falling core inflation. The Dollar falls】

September 14 - US inflation data released on Wednesday, which showed headline inflation rate rising slightly more than expected year-on-year to 3.7%, had limited impact on the dollar, which is slightly lower for now, MUFG FX analyst Lee Hardman said. He said markets expect the Fed to focus on the slowing trend in core inflation, which fell in August to 4.3% from 4.7% on an annual basis, although the monthly increase was slightly higher. Market participants believe the Fed will place more weight on the slowing trend in core inflation when setting policy and remain alert to upside risks to inflation from higher energy prices.