MHMarkets：March 12, 2024 Economic Highlights

Date: March 12, 2024

Economic Highlights (GMT + 8)

3:00pm

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8:30pm

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Market Overview

Global Market Recap

On Monday, the U.S. Dollar Index rebounded, approaching 103 at its highest, before closing up 0.108% at 102.85, due to the resilience of the U.S. economy and the market's belief that the fall in the Dollar Index was “too much.” U.S. Treasury yields rose, with the benchmark 10-year Treasury yield closing at 4.0982% and the 2-year Treasury yield, most sensitive to Fed policy rates, at 4.5381%.

Bitcoin breaks through $72,000 per coin, setting a new high; Ethereum surpasses the $4,000 mark, up over 70% for the year.

Affected by expectations of a Fed rate cut, spot gold fluctuated upward, struggling to break $2,185 multiple times, but eventually closing up 0.16% at $2,182.72 per ounce; spot silver ended up 0.63% at $22.47 per ounce.

Due to production cuts by OPEC and Russia slowing down oil exports and tightening supply, WTI crude experienced a V-shaped reversal in the U.S. market, closing up 0.36% at $78.21 per barrel; Brent crude ended up 0.61% at $83 per barrel.

U.S. stocks saw the Dow Jones rise by 0.12%, while the S&P 500 fell by 0.11%, and the Nasdaq fell by 0.41%. Semiconductor stocks suffered, with TSMC (TSM.N) down nearly 5%, AMD (AMD.O) down 4.3%, and Nvidia (NVDA.O) down 2%. The Nasdaq Golden Dragon China Index rose 2%, with Bilibili (BILI.O) surging 13%, and both JD.com (JD.O) and XPeng Motors (XPEV.N) rising over 5%.

European stocks were mixed, with Germany's DAX30 down 0.38%, the UK's FTSE 100 up 0.12%, and the Euro Stoxx 50 down 0.62%.

Hong Kong stocks started high and maintained strong fluctuations throughout the day. By the close, the Hang Seng Index was up 1.43%, and the Hang Seng Tech Index was up 2.86%, with a total trading volume of 92.945 billion HKD. In the sector, technology, tobacco, electric equipment, short video concepts, lithium battery, and automotive stocks led the gains, while coal and oil stocks led the declines. In individual stocks, Boyaa Interactive (00434.HK) surged 30%, Xinyi Solar (00968.HK) up 11%, GDS Holdings (09698.HK) up 18%, Bilibili (09626.HK) up 11%, while Rongxin China (03301.HK) fell 6.7%, and Kaisa Group (01638.HK) and China Shenhua (01088.HK) fell by 6.67% and 4%, respectively.

A-share major indices rose, with the ChiNext Index soaring over 4%, and heavyweight stocks like Contemporary Amperex Technology, Mindray Medical, Sungrow Power Supply, and EVE Energy seeing significant gains. By the close, the Shanghai Composite was up 0.74%, the Shenzhen Component Index up 2.27%, and the ChiNext Index up 4.60%. Sectors like solid-state batteries, electrical equipment, lithium mining, flying cars, and energy storage led the gains, while coal, oil, telecommunications, and construction machinery saw the most significant declines. The trading volume in the Shanghai and Shenzhen markets surpassed 1 trillion yuan for the first time since March 5.

Market Highlights:

· Fed Mouthpiece: Biden's Latest Budget Indicates Interest Rates Won't Drop Soon

· Market sources say the Republican leadership in the U.S. House of Representatives rejects Biden's budget proposal.

· European Central Bank Governor Kazimir: First Rate Cut Should Occur in June

· MicroStrategy Purchases 12,000 Bitcoins

· The Second Session of the 14th National People's Congress Concludes

· Director of the National Financial Regulatory Administration, Li Yunze: Researching the Reduction of Down Payment Ratio for Passenger Car Loans

· BYD Launches a Three-Year “Liberation Campaign,” Price War Continues

Institutional Views:

1. Goldman Sachs

As the Bank of Japan prepares to potentially move away from its negative interest rate policy, Goldman Sachs anticipates that the effect on the Japanese Yen could be less dramatic than expected. This significant shift is unlikely to prompt widespread repatriation or alter the Yen's fundamental behavior in a risk-on market context. Consequently, investors should moderate their expectations for a prolonged Yen surge based merely on the Bank of Japan's policy changes.

2. SocGen

Considering the Bank of Japan's potential policy shift alongside current market conditions, SocGen is recommending that investors look into taking bearish stances on USD/JPY by utilizing put spreads and reverse knock-out options. These tactics aim to capitalize on the expected appreciation of the yen, while also efficiently controlling risks and expenses. This cautious strategy is advised in anticipation of the pivotal BoJ meeting.

3. MUFG

MUFG maintains its endorsement of a short EUR/GBP position, forecasting that the GBP will outperform in the near term. This perspective is based on the anticipation that the ECB will implement rate cuts sooner than the BoE, further supported by the Fed's rate cut schedule aligning with that of the ECB. Recent indications from the ECB about possible rate reductions as soon as June, with April also under consideration, strengthen the argument for an imminent GBP rally against the EUR.

4. ING

ING points out that while short-term movements could lead to a decrease in EUR/USD within the coming week, their long-term forecast is still optimistic. This optimism stems from expected rate cuts by both the ECB and the Fed, with the latter predicted to pursue a more aggressive easing approach. On the other hand, EUR/JPY may encounter turbulence due to updates on Japan's GDP and speculation around Bank of Japan rate hikes. However, the market's anticipation of a rate adjustment in March may be too hopeful, signaling potential risks for the JPY in the time beyond this week.