Global Market Quick Take: Asia – November 15, 2024

Key points:

• Macro: PPI in line and Powell not in a hurry to cut rates
• Equities: Disney rallied 6.2% after strong earnings in streaming and the box office
• FX: USDJPY breaches 156.50 after Powell’s hawkish comments
• Commodities: Gold and copper drops to multi week/ month lows
• Fixed income: Yield curve reverses to flatten

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Jerome Powell indicated that strong U.S. economic growth permits a cautious stance on interest rate cuts, as immediate action isn't needed. He noted robust growth, a resilient labor market, and inflation nearing the Fed’s 2% target, despite recent slight price increases.
• October PPI revealed a 0.2% increase, aligning with expectations, although the core PPI surpassed forecasts. Similarly, the October consumer price index, released earlier, met expectations but indicated persistent inflation pressures.
• On tap today: China Industrial Production, China Retail Sales, UK GDP Growth Rate, US Retail Sales

Equities: 

• S&P 500 fell late in the session to close 0.61% lower after Powell indicated there was no hurry to cut rates. Russell 2000 index fell the most, ending the session down 1.37%.
• Autos fell after Trump plans to eliminate the $7,500 consumer tax credit for EVs. Rivian fell 14.3% while Tesla lost 6%. Disney rallied 6.2% after reporting strong earnings in streaming and the box office boosted by hits like Inside Out 2 and Deadpool & Wolverine.
• Berkshire Hathaway acquires 1.3 million shares of Domino's, securing a 3.6% stake valued at $550 million. The stock rises by 7.3% to $467.66 in late trading.
• Earnings – Alibaba

FX:

• USD rallied further after Powell’s comments on the strong US economy and no urgency to cut rates. USDJPY broke the 156.50 barrier while USDCAD reaches 4-year highs to trade above 1.4050.
• EURUSD found some support at 1.05 after falling for 5 straight days.
• GBPUSD is down 0.4% at 1.2660, heading for a seventh consecutive weekly decline, the longest in a decade. One-year volatility hits 8.2950%, a yearly high.

Commodities:

• WTI futures trades at $68.5 per barrel, as the IEA warned of a potential surplus over 1 million barrels per day by 2025 if OPEC+ boosts production. This coincides with declining Chinese demand, which has fallen for six months and is expected to grow at only 10% of 2023 levels this year.
• Gold fell below $2,560 to an eight-week low due to risk-taking and a strong US dollar after Trump's election win. His policies are expected to boost the economy and stocks, potentially raising inflation but slowing interest rate cuts, making gold less appealing.
• Copper futures fell toward $4 per pound, reaching a three-month low due to ongoing demand concerns and a stronger US dollar. As investors were unimpressed by Beijing's recent economic support measures.

Fixed income:

• Treasuries showed mixed results after Fed Chair Powell's comments reduced chances of a December rate cut, pushing front-end yields up and long-end yields down. A large block sale in SOFR June 2025 futures deepened front-end losses, contributing to the day's flattening trend. The 2s10s and 5s30s spreads flattened by 7 to 8 basis points, reversing most of Wednesday's steepening.

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