MHMarkets：March 04, 2024 Economic Highlights

Date: March 04, 2024

Economic Highlights (GMT + 8)

3:30pm

CHFCPI m/m

Market Overview

Global Market Recap

Last Friday, the U.S. dollar index experienced range-bound fluctuations during the Asian and European trading sessions and significantly declined during the U.S. session due to weaker-than-expected U.S. economic data, closing down by 0.243% at 103.88. The benchmark 10-year U.S. Treasury yield closed at 4.186%, while the rate-sensitive 2-year U.S. Treasury yield ended at 4.533%.

Lower-than-expected economic data strengthened expectations for interest rate cuts, combined with a weakening U.S. dollar index, pushed spot gold to a two-month high of 2088.16, eventually closing up 1.89% at 2082.98 USD/ounce; spot silver ended up 2%, at 23.13 USD/ounce.

International oil prices rose as ceasefire negotiations became further complicated due to the death of over a hundred Palestinian civilians waiting for aid. WTI crude oil closed up 1.94% at 79.96 USD/barrel; Brent crude has hovered above the 80 USD mark for three consecutive weeks, closing up 1.67% at 84.23 USD/barrel.

All three major U.S. stock indices rose. The Dow Jones increased by 0.23%, the S&P 500 by 0.8%, and the Nasdaq by 1.14%, with the latter two setting new historical highs. Nvidia (NVDA.O) closed up 4%, with its market capitalization surpassing 2 trillion USD. New York Community Bank (NYCB.N) plummeted nearly 26% to 3.55 USD, accumulating a 65% loss for the year.

European stock indices all closed higher, with Germany's DAX30 up 0.32%, the UK's FTSE 100 up 0.69%, and the Euro Stoxx 50 up 0.35%.

Hong Kong stocks opened lower but moved higher later on Friday, continuing to fluctuate in the afternoon. The Hang Seng Index closed up 0.47% at 16589.44 points. The Hang Seng Tech Index rose by 1.66% to 3488.13 points. By the close of last Friday, the total turnover of the Hang Seng Index reached 121.832 billion HKD. In the market, the metals sector saw gains, chip stocks continued their upward trend, automotive stocks rebounded, rare earth permanent magnet sectors were active, and biotech stocks declined. In terms of individual stocks, Pop Mart (09992.HK) rose 8%, XPeng Motors (09868.HK) increased by 8.2%, NIO (09866.HK) went up by 6.2%, Lenovo Group (00992.HK) increased by 4.8%, BYD Electronic (00285.HK) rose by 4.4%, Shandong Gold (01787.HK) increased by 4.3%, Maoyan Entertainment (01896.HK) went up by 4%, NetEase (09999.HK) fell by 2%, and BeiGene (06160.HK) dropped by 8.4%. Meituan (03690.HK) surged by 10.78%, with a trading volume of 9.675 billion HKD, leading the market.

In the A-share market, the three major indices initially surged but fell back before noon and then fluctuated upward in the afternoon. By the close, the Shanghai Composite Index was up 0.39%, the Shenzhen Component Index increased by 1.12%, and the ChiNext Index rose by 0.94%. On the market front, liquid cooling server concepts surged, with Inspur Information and Unisplendour hitting the daily limit; charging pile concepts also saw significant gains, with Heshun Electric and Autel also hitting the daily limit. Consumer electronics strengthened, with Sichuan Xun Material, Super Frequency Three, and Zhuoyi Technology among the stocks hitting the daily limit; the optical communication sector strengthened in the afternoon. Other sectors such as CPO concepts, state-owned enterprise clouds, computing power, information creation, communication equipment, media, semiconductors, etc., led the gains; while diversified financials, transportation services, agriculture, food and beverages, storage and logistics, artificial meat concepts, and pork were among the top losers. Over 3400 stocks advanced in both markets, with transaction volumes once again surpassing 1 trillion RMB.

Market Highlights:

· Federal Reserve: Inflation has significantly slowed down, but still remains above target levels.

· The final Markit Manufacturing PMI for the US in February reached a new high since July 2022.

· Eurozone's CPI monthly rate in February recorded the largest increase since April 2023.

· OPEC+ announces the extension of the voluntary oil production cut of 2.2 million barrels per day into Q2.

· Fitch and Moody's downgrade the ratings of New York Community Banks.

· Sources say the first day of negotiations for a ceasefire agreement in the Gaza Strip has concluded in Cairo.

· The Second Session of the 14th National Committee of the CPPCC will open on the afternoon of March 4.

Institutional Views:

1. Bank of America (BofA)

Bank of America's quantitative analysis points towards a positive forecast for the GBP/CAD exchange rate, driven by differing monetary policy forecasts between the Bank of Canada and the Bank of England. The expectation of more cautious or dovish approaches from the Bank of Canada, in contrast to the inflationary pressures in the UK, supports a stronger outlook for the GBP against the CAD. Nonetheless, unforeseen changes in Canadian wage growth could potentially challenge this perspective.

2. RBC

Royal Bank of Canada's analysis indicates a positive forecast for the USD/JPY pair, setting a target of 145 in the second quarter of 2024 amid changing monetary policy landscapes in the United States and Japan. Despite a general expectation for the USD/JPY to weaken, RBC recommends a cautious approach, highlighting the influence of the Federal Reserve's policy direction and the Bank of Japan's discussions on tightening monetary policy. Investors are encouraged to consider any dips in the USD/JPY exchange rate as opportunities to buy, with strategic positioning and hedging being key factors in the currency pair's future movement.

3. ING

ING forecasts that the Bank of Canada's meeting in March will likely have a limited effect on the USD/CAD exchange rate, predicting a stable trend in March before a decline driven by the US dollar begins in the second quarter. Although there's a possibility for a marginally more dovish stance from the Bank of Canada, the dominant impact of the Federal Reserve's interest rate expectations on predictions for Canadian rate cuts indicates that any shift towards a more dovish domestic outlook might be restrained.