MHMarkets：March 13, 2024 Economic Highlights

Date: March 13, 2024

Economic Highlights (GMT + 8)

3:00pm

GBPGDP m/m

Market Overview

Global Market Recap

On Tuesday, following the release of higher-than-expected U.S. CPI data for February, the U.S. Dollar Index sharply rose during the U.S. session, breaking through the 103 level at its peak, and finally closed up 0.082% at 102.93. U.S. Treasury yields started low but moved higher, with the benchmark 10-year U.S. Treasury yield closing at 4.1507%, and the 2-year yield, most sensitive to Fed policy rates, closing at 4.5842%.

Bitcoin experienced significant volatility, briefly surpassing the $73,000 mark per coin, and narrowly held above $71,000, closing at $71,019 per coin. Ethereum fell below the $4,000 mark, closing at $3,931.7 per coin.

Due to the impact of the higher-than-expected CPI data and the trend of the dollar, spot gold significantly fell during the U.S. session, closing down 1.12% at $2,158.27 per ounce; spot silver closed down 1.35% at $24.14 per ounce.

With OPEC maintaining its outlook for crude oil demand unchanged, international oil prices fell under pressure. WTI crude closed down 0.14% at $78.10 a barrel; Brent crude closed down 0.16% at $82.87 a barrel.

U.S. stock indices all rose. The Dow Jones increased by 0.6%, the S&P 500 by 1.1%, and the Nasdaq by 1.5%. Nvidia (NVDA.O) closed up 7.1%, Taiwan Semiconductor (TSM.N) up 3.8%, and Oracle (ORCL.N) rose more than 11%. The Nasdaq Golden Dragon China Index rose nearly 4%, setting a new high for the year, with KE Holdings (BEKE.N) up nearly 11%, Li Auto (LI.O) up nearly 9%, and Alibaba (BABA.N) up 1.5%.

European stock indices all closed higher, with Germany's DAX30 up 1.23%, the UK's FTSE 100 up 1.02%, and the Euro Stoxx 50 up 1.07%.

Hong Kong's main indices started high and continued to rise, expanding their gains in the afternoon. By the close, the Hang Seng Index was up 3.05% at 17,093.5 points, and the Hang Seng Tech Index was up 4.64% at 3,643.91 points, with total trading volume reaching 149.966 billion Hong Kong dollars. Sectors such as automobiles, property, sportswear, dining, and online healthcare led the gains, while gold, electric power, and online education stocks were among the losers. Individual stocks such as Haidilao (06862.HK) rose 13.62%, Jiumaojiu (09922.HK) up 12.81%, Xiaomi Group (01810.HK) up 11.34%, Bilibili (09626.HK) up 11.28%, Vanke (02202.HK) up 10.33%, Li Ning (02331.HK) up 8.07%, and WuXi AppTec (02359.HK) up 5.61%, with New Oriental (09901.HK) down 3.05%.

A-shares saw mixed performances, with the Shanghai index showing weakness amid fluctuations, while the ChiNext Index demonstrated strength. At the close, the Shanghai Composite was down 0.41%, the Shenzhen Component Index was up 0.51%, and the ChiNext Index was up 0.83%. Sectors such as flying cars saw significant gains with several stocks hitting the 20% upper limit; sectors like hospitality, liquor, real estate, and Xiaomi car concepts were among the top gainers, while shipping, coal, electric power, and oil were among the top losers. The trading volume in the Shanghai and Shenzhen stock markets exceeded 1 trillion yuan for the second consecutive trading day.

Market Highlights:

· Unexpected Rebound in U.S. Overall CPI for February

· Bank of Japan Considering Rate Hike in March

· Houthi Forces in Yemen: Operations to Escalate During Ramadan

· Al Arabiya TV: Hamas Accepts U.S. “Modified” Ceasefire Agreement in Gaza Strip

· Large Russian Refinery Attacked, Wholesale Gasoline Prices Rise

· State Council Executive Meeting: Increase Financial Support for Compulsory Education in Weaker Areas

· China's First Stock ETF Exceeding 200 Billion Yuan in Size Launched

Institutional Views:

1. Goldman Sachs

Goldman Sachs' review indicates that the British Pound (GBP) is trading around levels that align with their estimates of its fair value, highlighting the significant influence of external elements like inflation and policy decisions on its current valuation. Moving forward, fluctuations from this fair value are expected, but Goldman Sachs holds an optimistic view on the Sterling. This suggests a belief in the currency's potential to gain strength or advance beyond its current “pit stop” valuation in the future.

2. RBC

RBC adopts a watchful but prudent perspective on Swiss Franc (CHF) positions, recognizing the currency's historical gains and its involvement in carry trade strategies. The bank posits that a revival in the carry trade may lead to additional weakening of the CHF. Yet, the technical forecast is still unclear, marking a pivotal time for investors with short CHF positions, especially against the USD (USD/CHF). The forthcoming decisions of the Swiss National Bank (SNB) relative to other G10 central banks will play a vital role in determining the CHF's future trajectory.

3. MUFG

As the March policy meeting of the Bank of Japan nears, the air is thick with market speculation and strategic moves, hinting at a possible surge in yen volatility. MUFG suggests going short on CHF/JPY, predicting a stronger yen as a result of the Bank of Japan's expected tightening measures. This comes amid a split among BoJ officials and intense market expectations. It's crucial for investors and traders to keep a vigilant eye on the unfolding events before and after the BoJ meeting, considering the currency market's propensity for rapid shifts.

4. Credit Agricole

Credit Agricole highlights the pivotal role of wage growth data in determining the Bank of Japan's monetary policy path, especially regarding the potential departure from Negative Interest Rate Policy (NIRP). Remarks from BoJ Governor Ueda and the outcomes of wage negotiations have significantly shaped market anticipations and the Japanese yen's valuation. The forthcoming wage statistics will be a crucial factor in the BoJ's forthcoming decisions, with the market keenly observing for indications of a policy alteration that could influence the direction of the yen.