MHMarkets：February 26, 2024 Economic Highlights

Date: February 26, 2024

Economic Highlights (GMT + 8)

No High-impact news event

Market Overview

Global Market Recap

Last Friday, the U.S. dollar index recorded a weekly decline for the first time in nearly two months, with a rebound attempt peaking at 104 points unsuccessfully, eventually closing up by 0.003% at 103.94. The yield on the benchmark 10-year U.S. Treasury note gapped higher at the open but plummeted during the U.S. session, closing at 4.248%, marking a new low for the week. The yield on the rate-sensitive 2-year U.S. Treasury note closed at 4.688%.

Spot gold staged a sharp “V-shaped” rebound, at one point nearing the $2015 level, but later rallied significantly due to the weakening U.S. dollar and increased safe-haven demand amid escalating tensions in the Middle East, recovering all losses and breaking through the $2035 mark, eventually closing up 0.55% at $2035.56 per ounce. Spot silver saw a significant rise during the U.S. session, eventually closing up 0.9% at $22.95 per ounce.

International crude oil prices fell sharply due to the Federal Reserve indicating a rate cut or at least a delay of two months and progress in the ceasefire agreement between Israel and Palestine. WTI crude closed down 2.24% at $76.8 a barrel, while Brent crude closed down 2% at $81.92 a barrel.

U.S. stock indices collectively closed higher, with the Dow Jones Industrial Average preliminarily up 1.18% and the S&P 500 index up 2.1%, both setting new closing highs. The Nasdaq Composite rose 2.96%. Nvidia (NVDA.O) closed up 16%, with its market value approaching $2 trillion. AMD (AMD.O) surged over 10%, while Rivian (RIVN.O) fell 25%. The Nasdaq Golden Dragon China Index closed up 1.4%, with Li Auto (LI.O) up over 5% and Baidu (BIDU.O), favored by Citron, up over 3%.

European stocks ended broadly higher, with Germany's DAX 30 index up 0.28%, the UK's FTSE 100 index up 0.28%, and the Stoxx Europe 50 index up 0.35%.

Hong Kong stocks fluctuated widely throughout the day, with the Hang Seng Index opening down 88 points at 16,654 points, then quickly rallying to a high of 16,895 points, gaining 152 points and briefly rising above the 100-day moving average, before turning lower due to lack of follow-through; the market continued to soften in the afternoon. At the close, the Hang Seng Index was down 0.1%, up 2.36% for the week, while the Hang Seng Tech Index was down 0.3%, up 1.71% for the week, with a total turnover of 96.05 billion Hong Kong dollars. In terms of sectors, agricultural products and tourism stocks were strong, and dairy stocks performed well; computer equipment, coal, and public transportation stocks were among the top losers. In individual stocks, Longfor Group (00960.HK), Mengniu Dairy (02319.HK), China Resources Beer (00291.HK), and ENN Energy (02688.HK) all rose over 4%, Ctrip Group (09961.HK) rose over 3%, and Baidu (09888.HK) and Meituan (03690.HK) both rose over 2.5%; Lenovo Group (00992.HK), BYD Electronic (00285.HK), and NIO (09866.HK) all fell over 3%.

In the A-share market, the three major stock indices fluctuated throughout the day. At the close, the Shanghai Composite Index was up 0.55%, marking eight consecutive days of gains and returning above the 3000-point mark; the Shenzhen Component Index was up 0.28%, and the ChiNext Index was up 0.02%. On the market front, the Sora concept continued to rally, with Insa Group achieving its fourth limit-up in five days; the reducer concept picked up in the afternoon, with Nancal Technology and Fengli Intelligence hitting the 20% upper limit; the film and media sector surged throughout the day, with Guomai Culture achieving five consecutive limit-ups; the automotive industry chain continued to rise, with Celis hitting the upper limit; Nvidia concept, computer and communication equipment, photovoltaics, and other concept sectors led the gains; coal, shipping, and other sectors pulled back. Over 4400 stocks rose across the market, with a total transaction amount of over 920 billion yuan.

Institutional Views:

1. Bank of America (BofA)

As we near the RBNZ meeting, BofA's assessment suggests that the Official Cash Rate (OCR) will remain unchanged, accompanied by the central bank's continued firm stance. Investors are advised to view the NZDUSD pair positively, making allowances for possible market changes, and to see the AUD as a more stable option in the face of macroeconomic variability.

2. Credit Agricole

Credit Agricole's analysis provides a strategic approach to pinpointing high-reward carry trades among the G10 currencies. By concentrating on particular currency pairs, investors can better maneuver through the prevailing market conditions, taking advantage of short positions in JPY against certain currencies while considering long positions in GBP/CHF.

3. HSBC

Market observers are keenly awaiting the ECB's March meeting, focusing particularly on its potential effects on the EUR/USD and EUR/GBP pairs. The existing technical configuration highlights crucial support and resistance thresholds that may establish the trading boundaries for these currency pairs, contingent on the ECB's articulated position.

4. MUFG

MUFG's review suggests that the BoJ's positive outlook on wage increases and economic revival might result in a policy rate increase in March, an event the market presently underrates. Such a move could significantly affect the yen, possibly triggering a change in its direction within the larger framework of global financial stability and carry trade activities.