Global Market Quick Take: Asia – November 14, 2024

Key points: 

• Macro: In-line CPI boosted odds of Dec Fed cut, PPI and jobless claims up today 
• Equities: SMCI is down a further 6.4% after delaying its quarterly earnings report. 
• FX: EURUSD at one-year lows as dollar gains extend 
• Commodities: Copper fell 1.3% amid China demand concerns and strong dollar 
• Fixed income: 5s30s yield curve is poised for its largest single-day movement since December 

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Disclaimer: Past performance does not indicate future performance. 

 Macro:

• US CPI in October was bang in-line with expectations, and supported the case for further Fed easing putting a December cut back in play. Headline CPI was +0.2% MoM and 2.6% YoY, both as expected, and vs. +2.4% YoY in Sep. US Oct. CPI ex Food and Energy was at +0.3% MoM and +3.3% YoY, both as expected and vs. +3.3% YoY in Sep. Lack of an upside surprise prompted markets to take up the odds of a December rate cut to 83% from 60% yesterday.
• Donald Trump won the Republican trifecta as the GOP now has the majority in both houses of Congress, which along with the White House gives the party unified government control and the ability to fend off many curbs on the incoming president’s power.
• On tap today: Flash Q3 GDP for Eurozone, US Initial Jobless Claims (w/e 9th Nov), US PPI (Oct)

Equities:  

• US - S&P 500 closed flat after CPI data came in line with expectations.
• Rivian's shares surged by 13.6% after Volkswagen announced plans to invest up to $5.8 billion, surpassing their previous $5 billion agreement. 
• SMCI is down a further 6.4% after delaying its quarterly earnings report. It is now down 85.5% from its highs after Hindenburg Research published a report highlighting several accounting red flags.
• Japan - Nikkei 225 fell 1.66% on Wednesday, echoing Wall Street's decline. Japan's producer prices hit a 14-month high in October, signaling inflation. Investors are evaluating a 10 trillion yen AI chipmaker stimulus amid US-China trade tensions.
• Earnings – Walt Disney, JD.com, Applied Materials, Bili Bili

FX: 

• There was no stopping the US dollar even as the in-line US inflation print firmed up market expectations of a December Fed rate cut. DXY index surged past the May highs to climb to fresh highs in a year with across the board gains.
• EURUSD attempted a move above 1.0640 post-CPI but gains were short-lived and pair plunged all the way to 1.0560 to one-year lows. 
• USDJPY also rose past 155 to over 3-month highs. USDCNH, however, remains capped below 7.25 helped by onshore yuan fixing at a stronger level yesterday defying speculations that Beijing may let the yuan depreciate quickly to counter the trade war threats.
•  Sterling was relatively resilient after steep losses a day before, with GBPUSD still supported at the 1.27 handle. BOE speakers have remained balanced on rate cut odds given the likely inflationary impact from the budget.

Commodities: 

• WTI crude oil futures dropped to $68, a two-month low, amid demand concerns. OPEC reduced its 2024 demand growth forecast to 1.82 million barrels per day, citing weak data from China, reflecting caution despite a more optimistic outlook than others. Brent crude futures fell to $72.
• Gold fell 0.98% to $2,572 amid rising US dollar and rates, marking the fourth consecutive loss. Looming Trump tariffs and tax cuts deter investors, potentially limiting future Fed rate cuts. Silver dropped 1.4% to $30.31.
• Copper futures dropped 1.3% to $4.08 per pound due to demand concerns in China and a stronger US dollar. China's 10 trillion yuan debt package disappointed investors, while potential Trump tariffs and high copper inventory levels added pressure on prices.

Fixed income:  

• Treasury yield curve steepened sharply following October's CPI data, which revived expectations of a Fed rate cut in December. This caused front-end yields to decrease, widening the spread between the 5-year and 30-year maturities by over 8 basis points, marking the largest single-day steepening this year.  

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