MHMarkets：March 14, 2024 Economic Highlights

Date: March 14, 2024

Economic Highlights (GMT + 8)

8:30pm

USDCore PPI m/m

USDCore Retail Sales m/m

USDPPI m/m

USDRetail Sales m/m

USDUnemployment Claims

Market Overview

Global Market Recap

On Wednesday, the US Dollar Index surged before falling, dropping below the 103 mark, closing down 0.119% at 102.81. US Treasury yields rebounded, with the benchmark 10-year Treasury yield closing at 4.1879% and the 2-year Treasury yield, most sensitive to Fed policy rates, closing at 4.6324%.

Bitcoin touched the $73,000 mark again, closing at $72,713.10 per coin by the end of the US stock market.

Due to heightened geopolitical tensions spurring a flight to safety, and continued buying by global central banks, spot gold rebounded, at one point nearing $2,180, and finally closing up 0.75% at $2,174.36 per ounce; spot silver closed up 3.62% at $25.01 per ounce.

US crude oil inventories fell for the first time in seven weeks, and a Ukrainian drone attack on a Russian refinery pushed oil prices higher. WTI crude closed up 2%, at $79.66 per barrel; Brent crude closed up 1.87%, at $84.42 per barrel.

The Dow Jones Industrial Average closed up 0.1%, the S&P 500 Index down 0.19%, and the Nasdaq down 0.54%. Tesla (TSLA.O) closed down 4.5%, with Apple (AAPL.O) and Nvidia (NVDA.O) both dropping more than 1%. The Nasdaq Golden Dragon China Index closed up 1%, with JD.com (JD.O) and Baidu (BIDU.O) up more than 2%, and GDS Holdings (GDS.O) up 9%.

European stock indexes were mixed, with Germany's DAX30 index closing down 0.02%; the UK's FTSE 100 index up 0.31%; and the Euro Stoxx 50 index up 0.35%, breaking through 5000 points for the first time in 24 years.

Hong Kong's main indexes diverged; at close, the Hang Seng Index was down 0.07% at 17,082.11 points, while the Hang Seng Tech Index was up 0.34% at 3,656.3 points, with a total market turnover exceeding 120.449 billion Hong Kong dollars. On the market, gold stocks, real estate agents, film and television stocks, and education stocks led gains, while inner property stocks and Alibaba concept stocks saw the largest declines. In individual stocks, BOSS Direct Employment (02076.HK) closed up 20.77%, RemeGen (09995.HK) up 14.79%, Hutchison Medicine (00013.HK) up 11.61%, ZTO Express (01519.HK) down 8.29%, China Pacific Insurance (02601.HK) down 7.6%, and Country Garden (02007.HK) down 4.92%.

A-shares' three major indexes maintained a fluctuating trend throughout the day. At close, the Shanghai Composite Index was down 0.40%, the Shenzhen Component Index down 0.27%, and the ChiNext Index down 0.57%. On the market, sectors such as Sora concept, cloud gaming, internet, media entertainment, and software services led gains, while insurance, real estate, agriculture, forestry, fishing, and securities sectors saw the most significant declines. 

Institutional Views:

1. Bank of America (BofA)

BofA anticipates a major change in Japan's approach to monetary policy, expecting the Bank of Japan (BoJ) to move away from its Negative Interest Rate Policy (NIRP) and Yield Curve Control (YCC) strategies in the next March meeting. This anticipated shift is supported by signs of stronger domestic demand, substantial wage increase demands, and the setup for a new policy framework. Ending NIRP/YCC could represent a critical transition in how Japan aims to meet its 2% inflation goal, affecting financial markets locally and worldwide.

2. HSBC

HSBC points out a potential risk for investors betting against the USD, noting that the market's response after the Consumer Price Index (CPI) release suggests a strong belief in the Federal Reserve's continued easing. Yet, any shift towards more hawkish guidance from the Fed could undermine these positions. It underscores the critical need to pay close attention to future Fed announcements for hints on the direction of interest rates. Investors are encouraged to remain alert to these developments, as they may have a substantial effect on USD values shortly.

3. Credit Agricole

Credit Agricole warns of a discrepancy between the GBP's existing premium and its interest rate differential compared to other G10 currencies, suggesting a cautious stance on the GBP's short-term prospects. The upcoming Bank of England (BoE) policy meeting offers a chance for reevaluation. However, unless the Monetary Policy Committee (MPC) adopts a decisively hawkish tone, the GBP's value could be at risk. Investors and traders are encouraged to closely monitor the BoE meeting results and their potential impact on the GBP.

4. Danske Bank

The decision on when the Bank of Japan might move away from its negative interest rate policy involves complex considerations, affecting both market movements and the value of the currency. Danske Bank's analysis points to an April adjustment as the most likely timeframe, taking into account strategic factors and the timing of important economic indicators. Despite the uncertainty around the exact timing, Danske Bank maintains a strongly bullish forecast for the Japanese yen, highlighting its potential for growth in a year marked by notable policy changes.

5. ANZ

Gold has seen a significant upswing, but ANZ predicts a temporary pullback due to its overbought status and the market moving ahead of underlying economic and geopolitical factors. The bank emphasizes the crucial role of investment demand in determining gold's price trajectory in the latter half of 2024, while also noting that elevated prices might temper physical demand. Investors are advised to prepare for a possible phase of consolidation and correction, with ANZ setting a near-term target price at USD 2,100 per ounce.