Global Market Quick Take: Asia – January 15, 2025

Key points:

• Macro: US Dec PPI came in weaker at 0.2% vs 0.4% m/m
• Equities:  Eli Lily’s shares dropped 6.6% due to weak Q4 weight-loss drug sales
• FX: EURGBP has reached its highest level in four months
• Commodities: Copper rose above $4.30, hit 2-month high
• Fixed income: U.S. 30-Year Yield Surpasses 5% Again

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Disclaimer: Past performance does not indicate future performance.

Macro:

• US December PPI came in at 0.2% m/m, below the expected 0.4%. Core PPI m/m also came below at 0% vs 0.3% estimate. The year-on-year figure came in at 3.3%, below the 3.5% expected while the core figure was at 3.5% vs 3.8% expected.

Equities: 

• US - US equities closed mixed on Tuesday as traders awaited new US inflation data. The S&P 500 increased by 0.1%, the Dow Jones rose 221 points, while the Nasdaq 100 fell by 0.1%. Eli Lilly's shares dropped 6.6% due to disappointing preliminary Q4 weight-loss drug sales, negatively impacting the Health Care sector.
• Hong Kong & China - HSI rose 1.8% and CSI 300 rallied 2.3% after China's regulator and PBoC announced measures to boost stock purchases and increase forex reserves in Hong Kong. New yuan loans surged in December. Gains were led by Meituan, Kuaishou, BYD Electronic, and Xiaomi. However, caution remained ahead of China's GDP and activity data releases.
• Earnings to watch this week: Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Bank of America 

FX:

• GBPUSD has rebounded slightly, aiming to end its longest losing streak since mid-November, with a rise of less than 0.1% to 1.2209. Sterling's overnight volatility is set for its second-highest close in nearly two years ahead of UK and US CPI data.
• EURGBP is at a four-month high above 0.8448, while EURUSD leads G-10 currencies, rising 0.6% to a high of 1.0304. One-week euro volatility surged on the tariffs report, up 142 basis points to 11.09%, the highest since November 6.
• USDCHF fell 0.5% to 0.9129 as the Swiss central bank continues easing, while the Federal Reserve maintains current rates, according to Bank of America strategists.
• USDJPY rose 0.1% to 158.05, breaking a three-day losing streak after comments from BOJ Deputy Governor Ryozo Himino.

Commodities:

• Gold rose above $2,670, driven by weaker-than-expected U.S. inflation data, which increased expectations that the Federal Reserve might continue its rate-cutting path.
• US natural gas futures rose over 1% to above $3.95 per MMBtu, driven by forecasts of colder weather potentially boosting demand.
• Copper futures rose above $4.30 per pound, reaching a two-month high, as China's copper imports surged 18% and exports exceeded expectations. This, coupled with China's economic support measures, and reports of gradual Trump tariffs.
• Sugar fell 3.2% to 18.2 cents per pound, the lowest since August, due to improved crop prospects in Brazil and potential oversupply concerns from China's trade policy and increased exports from India and Thailand, impacting global market dynamics.

Fixed income:

• Treasury market saw steepening, with front-end support from lower-than-expected December PPI figures and rising yields further out on the curve. There was significant demand for downside protection in the options market, with one position collecting over $40 million in premiums. Dollar swap spreads widened, notably the 2-year tenor. U.S. yields at the front end rose while the long end was cheaper by up to 2.5 basis points, steepening the 2s10s and 5s30s spreads.

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