MHMarkets：March 06, 2024 Economic Highlights

Date: March 06, 2024

Economic Highlights (GMT + 8)

8:30am

AUDGDP q/q

9:15pm

USDADP Non-Farm Employment Change

Tentative

GBPAnnual Budget Release

10:45pm

CADBOC Rate Statement

CADOvernight Rate

11:00pm

USDJOLTS Job Openings

11:30pm

CADBOC Press Conference

Market Overview

Global Market Recap

On Tuesday, the U.S. Dollar Index rose during the Asian and European sessions, approaching the 104 level, but fell sharply after the U.S. February PMI missed expectations, closing down 0.052% at 103.78. U.S. Treasury yields opened high and moved lower, with the benchmark 10-year Treasury yield closing at 4.152% and the 2-year yield, most sensitive to Federal Reserve rate policies, closing at 4.562%.

As the market continues to bet on a Fed rate cut in June, spot gold briefly surpassed $2,141 per ounce, reaching a new high, before retreating and closing up 0.72% at $2,129.62 per ounce; spot silver encountered resistance and fell, peaking at $24 but closing down 0.91% at $23.67 per ounce.

Affected by weak demand, WTI crude oil fell for two consecutive trading days, closing down 0.76% at $78.26 per barrel; Brent crude closed down 0.04% at $82.72 per barrel.

All three major U.S. stock indices fell more than 1%, with the Dow down 1%, the S&P 500 down 1%, and the Nasdaq down 1.65%. Apple (AAPL.O), recently hit by falling iPhone sales, dropped 2.8%, while Nvidia (NVDA.O) rose 0.8%, narrowing the market cap gap between the two to $500 billion. Tesla (TSLA.O) fell 3.9% after its Berlin factory was halted, Coinbase (COIN.O) dropped 5%, and MicroStrategy (MSTR.O) plummeted 21%. The NASDAQ Golden Dragon China Index fell 1.49%, but NIO (NIO.N) rose against the trend by 2.8%.

European stocks had mixed results, with Germany's DAX 30 index down 0.1%; the UK's FTSE 100 index up 0.08%; and the Stoxx Europe 50 index down 0.4%.

Hong Kong stocks opened lower and continued to fall, with the Hang Seng Index dropping more than 3% at one point, touching the 50-day moving average; the Hang Seng Tech Index dropped more than 4%. At close, the Hang Seng Index was down 2.61%, and the Hang Seng Tech Index was down 4.34%, with a total trading volume of HK$112.129 billion. Most hot Hong Kong stocks fell, with Weibo (09898.HK) down 9.23%, and both JD.com (09618.HK) and Baidu (09888.HK) falling more than 5%. The gold sector went against the market trend, with Shandong Gold (01787.HK) and Zhaojin Mining (01818.HK) leading the gains in gold stocks.

A-shares fluctuated throughout the day. By close, the Shanghai Composite was up 0.28%, the Shenzhen Component Index was down 0.23%, and the ChiNext Index was down 0.06%. Active sectors included AI phone concepts, with Foran Technology hitting the upper limit; automobile stocks surged in the afternoon, with Ankai Bus and Dongfeng Automobile hitting the upper limit. Additionally, sectors like flying cars, gold, national defense, banking, electricity, tourism, etc., led the gains, while CXO, seed industry, daily chemical, and hotel and catering sectors were among the top losers. Over 4,300 stocks fell across the market, with total trading volume exceeding 1 trillion yuan for the fifth consecutive trading day.

Market Highlights:

· U.S. February PMI Indicates Signs of Rising Price Pressures

· Israeli Defense Minister: Decision on Military Action in Lebanon Is Approaching a Critical Moment

· Kazuo Ueda: The Decision on Whether to Issue a Retail Central Bank Digital Currency in Japan Should Be Made Through Public Discussion

· Eurozone January PPI Records Largest Decline Since May 2023

· Bitcoin Drops Nearly $10,000 After Hitting a Record High

· Government Work Report: This Year's GDP Growth Target is Around 5%

· Government Work Report: To Issue 1 Trillion Yuan in Ultra-Long-Term Special Government Bonds This Year

Institutional Views:

1. Bank of America (BofA)

BofA suggests that the upcoming ECB meeting is unlikely to significantly influence the EUR, with greater importance placed on US economic indicators and Federal Reserve policies for determining future EUR/USD trends. Despite the ECB's potential dovish leanings and market expectations for rate cuts, BofA advises focusing on broader economic and policy developments, particularly in terms of cross-currency impacts.

2. ANZ

ANZ holds an optimistic view on the GBP's future, driven by strong UK economic indicators and inflationary pressures that may affect BoE policies. The bank forecasts a notable divergence between the GBP and CHF, based on differing economic and policy outlooks. ANZ's bullish GBP/CHF position, targeting 1.14, reflects confidence in the UK's economic resurgence in 2024 and the GBP's superior performance relative to the CHF.

3. Danske Bank

Danske Bank expects a muted reaction to the ECB's March policy meeting, as current market pricing aligns with the ECB's outlook. The bank's bearish EUR/USD perspective is supported by the relative economic and inflationary strengths of the U.S., coupled with a U.S.-focused equity rally that favors the USD. Danske Bank predicts a decline in EUR/USD to 1.05/1.04 over the next 6 to 12 months, emphasizing the stronger U.S. economic environment compared to the eurozone.

4. MUFG

MUFG highlights the potential historic significance of the upcoming BoJ meeting, with a slight inclination towards a March rate hike. This reflects optimism for Japan's economy moving towards stable inflation and wage growth, marking a significant shift from long-standing monetary policies. The decision's timing is critical, reflecting the complex considerations that influence BoJ's policy direction amidst evolving economic and demographic challenges.

5. Barclays

Barclays forecasts a pause in interest rate adjustments by the Bank of Canada in its March meeting, opting for a wait-and-see approach amid mixed economic signals. While near-term CAD dynamics against the USD may remain stable, the Canadian currency is expected to gain relative strength against other commodities currencies, supported by Canada's close economic connections with the United States.