Global Market Quick Take: Asia – November 20, 2024

Key points:

• Macro: Geopolitical tensions flared up, UK CPI and Nvidia earnings on tap
• Equities: Super Micro surged 31.2% after appointing auditor, submitting compliance plan
• FX: EURUSD back above 1.06 and GBPUSD heading to 1.27
• Commodities: Gold rose above $2,630 amid Russia-Ukraine conflict tensions
• Fixed income: Treasuries surge due to increased risk aversion

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Geopolitical tensions took a step up as Ukraine made making its first ATACMS strike inside Russia. In response, Russia’s foreign minister threatened a nuclear response. Risk off was short-lived however as US said that it sees no reason to adjust its nuclear posture in response to Russia’s decision.
• Canada’s October CPI was a notch higher than expectations, with the headline coming in at 2.0% YoY from 1.6% YoY in September and the trimmed core measure at 2.6% YoY from 2.4% YoY previously and expected. Bets for a 50bps cut in December were trimmed marginally, but still about 33bps of easing is priced in for BOC’s last meeting of the year.
• On tap today: UK CPI, German PPI, Nvidia earnings (here is a trader’s guide for Nvidia earnings). Speakers: ECB President Lagarde, de Guindos; BoE’s Ramsden; Fed's Barr, Cook, Bowman & Collins.

Equities: 

• US – S&P 500 closed 0.4% higher despite geopolitical escalations after Ukraine made its first ATACMS strike inside Russia. Nvidia gained 4.9% ahead of its earnings report tonight.
• Super Micro Computer led the S&P 500, surging 31.2% after it appointed an auditor and submitting a compliance plan to Nasdaq.
• Walmart reported revenue and earnings that beat expectations while raising its forecast for this year. The stock gained 3.0% in today’s session to new highs.
• Hong Kong - HSI rose 0.4% due to positive Wall Street sentiment and Chinese VP He Lifeng's comments on Hong Kong's economic growth. Gains were led by tech and consumer sectors but were limited by caution ahead of the PBoC's rate review, with uncertainty about potential RRR cuts.
• Earnings – Nio, Target, Nvidia, Snowflake, Palo Alto, Zim, Jack

FX:

• The US dollar got a safe-haven bid into the European open on Tuesday as geopolitical tensions flared up with Ukraine’s attack and Russia’s use of the N-word. However, the greenback returned lower subsequently as risk-off moves eased.
• CAD outperformed with Canada’s CPI coming in higher and fuelling a slight hawkish repricing of the Bank of Canada expectations. USDCAD returned back below 1.40 handle and the 21DMA at 1.3924 could be the next key test. Saxo’s Trade Signals tool signals a possible bearish move in EURCAD towards 1.4712 support.
• AUD and NZD also remained strong, and China’s LPR decision is up today. RBA’s minutes yesterday continued to signal a hawkish stance, but risk on sentiment will be key for activity currencies to extend their gains. Geopolitical tensions and Nvidia earnings could be a key gauge of risk sentiment in the day ahead. AUDUSD traded above 0.6540 and NZDUSD rose to 0.5920.
• EURUSD marched above 1.06+ and GBPUSD drifted closed to 1.27 handle in early Asian hours as risk-on moves extended. UK CPI is key ahead as the BOE is not expected to cut rates in December.

Commodities:

• Gold rose 0.8% to over $2,630 as tensions escalated in the Russia-Ukraine conflict, prompting investors to seek safety in bullion.
• WTI crude oil futures stayed near $69, influenced by geopolitical tensions. The Ukraine-Russia conflict escalated with Ukraine's use of Western missiles and Russia's expanded nuclear doctrine, while concerns in the Middle East eased. Brent crude fluctuated around $73.
• Arabica coffee futures eased to $2.81 per pound, near a 13-year high, due to supply concerns and EU regulation uncertainty. Brazil's drought reduced crop prospects, delaying Intercontinental Exchange contract changes to 2025

Fixed income:

• Treasury yields fell, particularly at the long end, although they pulled back from the day's highest levels. This decline was initially spurred by increased risk aversion after Ukraine's first use of US missiles against Russia, which affected European stocks and briefly impacted US equities.
• Expectations for Bank of Canada’s rate cuts in December slightly decreased to 32 basis points from 36 basis points, following October's CPI figures, which were slightly above expectations.  

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