MHMarkets：February 22, 2024 Economic Highlights

Date: February 22, 2024

Economic Highlights (GMT + 8)

4:15pm

EURFrench Flash Manufacturing PMI

EURFrench Flash Services PMI

4:30pm

EURGerman Flash Manufacturing PMI

EURGerman Flash Services PMI

5:30pm

GBPFlash Manufacturing PMI

GBPFlash Services PMI

9:30pm

USDUnemployment Claims

10:45pm

USDFlash Manufacturing PMI

USDFlash Services PMI

Market Overview

Global Market Recap

On Wednesday, the U.S. Dollar Index fluctuated around the 104 mark and eventually fell by 0.073%, closing at 103.99. Following the announcement of the results of the U.S. 20-year Treasury bond auction, yields on U.S. Treasury bonds rebounded, with the benchmark 10-year Treasury yield rising back above 4.30%, and the 2-year Treasury yield, which is most sensitive to Federal Reserve policy rates, closing at 4.651%.

Spot gold prices plummeted in the session, weakening hopes for an early interest rate cut as suggested by the minutes of the Federal Reserve meeting. Gold briefly fell below the 2020 threshold, eventually closing up 0.08%, at $2025.99 per ounce; spot silver ended below the 23 mark, down 0.53%, at $22.89 per ounce.

As traders weighed signs of tightening supply in the spot crude oil market, international oil prices rebounded. WTI crude oil closed up 1.1%, at $77.98 a barrel; Brent crude oil was up 0.76%, at $83.09 a barrel. In terms of natural gas, U.S. natural gas futures surged by 12% during the day.

The three major U.S. stock indices ended mixed, with the Dow Jones and S&P 500 indices posting slight gains, while the Nasdaq fell by 0.3%. Nvidia (NVDA.O) fell nearly 3%, and Coinbase (COIN.O) dropped more than 6%. The Nasdaq Golden Dragon China Index rose by 0.97%, with Li Auto (LI.O) up more than 4% and Alibaba (BABA.N) increasing by more than 3%.

Most major European stock indices closed higher, with Germany's DAX30 up by 0.29%; the UK's FTSE 100 down by 0.73%; and the Euro Stoxx 50 up by 0.32%.

Hong Kong stocks opened lower but gained throughout the day. The Hang Seng Index opened down 64 points, at one point falling by as much as 108 points to 16138, but turned around under the influence of mainland stock markets, climbing by more than 508 points to 16756 at its peak. By the afternoon, the gains narrowed, closing up 1.57% with the Technology Index up 2.66% and the total trading volume increasing to 122.4 billion Hong Kong dollars. In the market, semiconductor and air logistics stocks were strong, while insurance, banking, and Chinese brokerage stocks performed well. Retailers, agricultural products, and coal stocks were among the biggest losers. In individual stocks, Longfor Group (00960.HK) surged by more than 9%, SenseTime (00020.HK) by more than 7%, China Ping An (02318.HK) by more than 6%, with China Merchants Bank (03968.HK), and WuXi Biologics (02269.HK) both rising by more than 5%; HSBC Holdings (00005.HK) fell nearly 4%, Chow Tai Fook (01929.HK) by 2%, and PetroChina Co Ltd (00857.HK) by more than 1%.

Market Highlights:

· Federal Reserve Meeting Minutes: Officials Worried About Premature Rate Cuts, Inflation Stagnation

· Is the U.S. Government Heading for Another Shutdown Crisis？ Republican Hardliners Push a Stopgap Spending Bill

· NVIDIA's Quarterly Revenue and Earnings Guidance Both Exceed Expectations

· Israeli Officials Say There Are Initial Signs That Hostage Agreement May Make Progress

· Work on Drafting the Private Economy Promotion Law Has Begun

· In 2023, the Total Assets of Financial Institutions in China's Banking Sector Reached 417.3 Trillion Yuan

· Supreme Procuratorate: Comprehensive Punishment for Illegal and Criminal Activities Related to Listed Companies

Institutional Views:

1. Bank of America (BofA)

BofA's outlook for G10 currencies recommends a discerning strategy for forex trading in the near future, highlighting the likelihood of continued USD weakness against certain high beta currencies. Notably, the GBP emerges as an attractive choice for long positions, supported by favorable economic impulses expected from the forthcoming UK budget and the general under-ownership of UK assets. This strategic approach provides investors with guidance on how to maneuver through the intricacies of the G10 FX markets against the backdrop of changing global economic landscapes.

2. Credit Agricole

Credit Agricole indicates that the release of today's FOMC minutes might trigger a reassessment of USD market positions. This could particularly happen if the minutes align with market predictions of a postponed beginning to the Federal Reserve's easing cycle and fail to present a novel inflation perspective that might alter prevailing trends in the fixed income market. Such a development could prompt investors, who have heavily bet on the USD's strength, to start taking profits. This situation underscores the complex interplay among the Federal Reserve's communications, market anticipations, and the valuation of currencies.

3. ANZ

ANZ's outlook suggests a tough year ahead for the NZD/USD, mirroring the difficulties faced by the GBP/USD in 2023. Although the Reserve Bank of New Zealand may adjust interest rates, the overall economic environment in New Zealand is likely to curb any upward movement for the NZD. This highlights the intricate connections between the actions of central banks, the state of the economy, and how currencies fare.