MHMarkets：March 05, 2024 Economic Highlights

Date: March 05, 2024

Economic Highlights (GMT + 8)

11:00pm

USDISM Services PMI

Market Overview

Global Market Recap

On Monday, due to weak U.S. economic data, expectations for a Federal Reserve rate cut were heightened, and the U.S. Dollar Index fell for three consecutive trading days, closing down 0.045% at 103.83. U.S. Treasury yields rebounded, with the benchmark 10-year Treasury yield closing at 4.217% and the 2-year Treasury yield, most sensitive to Federal Reserve policy rates, closing at 4.612%.

Driven by rising expectations for rate cuts and a weaker U.S. Dollar Index, spot gold broke above $2,115 per ounce, hitting a new high since December 2023, with a significant daily increase of about $30, finally closing up 1.58% at $2,115.82 per ounce. Spot silver closed up 3.29% at $23.89 per ounce.

Due to a surge in crude oil exports from the U.S. Gulf region offsetting the impact of OPEC+ extending voluntary production cuts and weakening demand for oil as the Northern Hemisphere winter comes to an end, international crude oil prices fell. WTI crude fluctuated within a range during Asian and European trading sessions, twice attempting but failing to break through the $80 mark, and continued to fall during U.S. trading, closing down 1.38% at $78.86 per barrel; Brent crude barely closed up 0.05%, at $83.62 per barrel.

U.S. stock indexes all fell, with the Dow Jones down 0.24%, the S&P 500 down 0.1%, and the Nasdaq down 0.4%. New York Community Bank (NYCB.N) fell more than 23%, while Nvidia (NVDA.O) rose 3.6%, setting a new all-time high. Cryptocurrency-related stocks led the market gains, with Coinbase (COIN.O) up more than 11% and MicroStrategy (MSTR.O) up 23%. The Nasdaq Golden Dragon China Index fell nearly 4%, with Li Auto (LI.O) down 13% and Alibaba (BABA.N) down more than 3%.

European stocks saw mixed results, with Germany's DAX 30 index down 0.11%, the UK's FTSE 100 index down 0.55%, and the Euro Stoxx 50 index up 0.37%.

Hong Kong stocks showed a volatile trend on Monday, with the Hang Seng Index closing up 0.04% at 16,595.97 points. The Hang Seng Tech Index closed down 0.38% at 3,474.77 points. By the close, the total turnover of the Hang Seng Index reached HK$106.867 billion. In the market, the WuXi AppTec group strengthened, three oil giants rose against the market, automobile stocks fell, and real estate developers started high but moved lower. In terms of individual stocks, WuXi AppTec (02359.HK) rose 12.5%, WuXi Biologics (02269.HK) rose 11.7%, Lenovo Group (00992.HK) rose 7.15%, Meituan (03690.HK) rose 3.5%, CNOOC (00883.HK) rose 3.3%, Li Auto (02015.HK) fell 10.7%, XPeng Motors (09868.HK) fell 4.6%, NIO (09866.HK) fell 4.3%, and Vanke (02202.HK) fell 7.1%.

China's A-share major indexes were mixed, with the Shanghai Composite up 0.41%, the Shenzhen Component Index up 0.04%, and the ChiNext Index up 0.59% by the close. In the market, liquid cooling server concepts performed strongly throughout the day, with Industrial Fulian and Ingenic Semiconductor among the stocks hitting their upper limits. Innovative drug concepts were strong, with Tonghua Jinma and Panlong Pharmaceutical among the stocks hitting their upper limits. Additionally, concepts related to Nvidia, Sora, as well as sectors like oil, coal, and media entertainment were among the top gainers; real estate, finance, and liquor sectors were among the top losers. Around 3,100 stocks fell across both markets, with total turnover exceeding 1 trillion yuan for the fourth trading day.

Market Highlights:

· Federal Reserve's Bostic: Expects to Pause Rate Cuts for Assessment After the First Decrease

· The U.S. Supreme Court Overturns Ruling Banning Trump from Participating in Primaries

· Israeli Military Conducts Major Raid on Palestinian Administrative Capital

· Bitcoin Breaks Above $67,000

· Japan's Chief Cabinet Secretary, Fumio Kishida: Japan Has Not Yet Overcome Deflation

· The Fourteenth National People's Congress Second Session to Open on the Morning of March 5

· Unless Under Special Circumstances, No More Prime Minister Press Conferences in the Coming Years of This National People's Congress

Institutional Views:

1. Bank of America (BofA)

The Ongoing Inflation vs. Growth Dialogue: The discourse surrounding the tension between rising inflation and economic growth persists. Bank of America posits that inflation's trajectory will play a pivotal role in guiding the Federal Reserve's policy choices. Yet, opinions on this matter differ across the spectrum of market stakeholders.

Outlook and Predictions: Bank of America upholds a pessimistic stance on the US Dollar throughout the year, in harmony with its economic team's predictions of a gentle deceleration in the US economic momentum. Investors, however, are recommended to remain patient and watchful as events develop.

2. ANZ

ANZ predicts that any strengthening of the EUR prior to the ECB meeting could be temporary, especially if the meeting concludes with a “hawkish hold.” This stance underscores ANZ's warning against anticipating extended gains for the EUR amid a potentially difficult economic climate within the EU. Nevertheless, ANZ identifies potential in certain currency pairs, like EUR/CHF, suggesting that selective approaches may still uncover advantageous scenarios in the prevailing market environment.

3. Goldman Sachs

Goldman Sachs expects the Bank of Canada (BoC) to maintain its current policy stance in the forthcoming meeting, projecting the April gathering as the pivotal moment for more substantial policy adjustments, contingent on updated economic forecasts. The firm posits that the Canadian Dollar (CAD) may present a distinctive trading opportunity, given the possibility of an earlier shift in policy direction relative to other G10 currencies, subject to forthcoming inflation data.

4. TD Securities

TD Securities projects that the shifting emphasis on risk, economic growth, and worldwide inflation trends will be key in determining market movements shortly. The firm recommends a close watch on forthcoming economic reports and inflation metrics, as these are expected to be instrumental in signaling a move towards a risk-friendlier investment environment. TD's approach to currency strategy is sophisticated, drawing on an understanding of global inflation trends and growth rates across regions. It highlights potential in the EUR, GBP, and KRW, particularly against a weakening CHF, suggesting targeted opportunities in this evolving financial landscape.

5. Barclays

Barclays predicts that the recent downturn in the USD's upward trajectory is a temporary phase, expecting a reversal that leans towards a bearish perspective on the EUR/USD pair in the short run. This outlook is influenced by a mix of technical factors shaping USD sentiment, the anticipated diverging policy paths of the Federal Reserve and the European Central Bank, and differing economic forecasts for the US and Eurozone. Specifically, the forthcoming US labor market data is seen as a potential trigger for reinforcing the USD's strength, suggesting it as an advantageous time for investors to explore short positions in the EUR/USD currency pair.