Global Market Quick Take: Asia – November 25, 2024

Key points:

• Macro:  Trump pick fiscal hawk Scott Bessent as Treasury Secretary
• Equities: China CSI 300 fell 3.1%, reaching 3-week lows
• FX: Bloomberg Dollar Spot Index had eight week straight winning streak
• Commodities: Gold surpassed $2,700, up 5% weekly, amid rising geopolitical risks
• Fixed income: Two-year yield has an eight-week winning streak, longest since 2022

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Trump picks hedge fund billionaire Scott Bessent as Treasury Secretary. Bessent is known as a fiscal hawk who has advised Trump to create a “3-3-3" policy, including cutting the budget deficit by 3% of GDP by 2028, pushing GDP growth to 3% via deregulation and pumping extra 3 million barrels of oil each day.
• European services PMI data on Friday came in broadly lower than expected. Germany Nov services PMI came in at 49.4 vs 51.7 est, France services PMI at 45.7 vs 49 est and Euro-area services at 49.2 vs 51.6 est. EURUSD price action was volatile, falling sharply to a low of 1.0332 on the news before recovering sharply back above 1.04 in a matter of minutes.

Equities: 

• US - US markets closed slightly higher on Friday with S&P 500 gaining 0.35% and Nasdaq 100 adding 0.17%. Dow Jones continues to outperform, adding 426 points propelled by Boeing (+4.1%) and Nike (+3.06%).
• Hong Kong - HSI dropped 1.9% on Friday amid weak earnings and fears of US tariff hikes with Trump's potential return. It fell 1% for the week, with tech shares down 2.6% as PDD Holdings and Baidu missed earnings expectations.
• China – CSI 300 Index fell 3.1%, reaching three-week lows due to concerns over China's economy, stimulus effectiveness, and potential US tariffs. Downward earnings revisions from major Chinese companies added pressure.
• Earnings - Couche-Tard, Agilent, Zoom Video

FX:

• The Bloomberg Dollar Spot Index decreased by 0.5% following an eight-week upward trend, the longest this year. Bessent is known for his market expertise and preference for reduced spending and more gradual tariffs.
• CAD and AUD outperformed against USD in G10 currencies last one week with 0.56% and 0.51% respectively.
• EURUSD recovered from its lowest level since 2022, after it dropped 1.3% to 1.0335, its lowest since November 2022. Eurozone business activity unexpectedly contracted in November due to political instability and trade tensions.

Commodities:

• WTI crude increased by 1.6% to $71.2, with a weekly gain of over 5%, driven by rising geopolitical tensions from the Ukraine conflict. The US imposed additional sanctions on Russia's Gazprombank and banned imports from over 30 Chinese companies linked to forced labor. Brent crude gained 1.3% to $75.2.
• Gold rose to $2,716, gaining nearly 5% for the week, as geopolitical risks increased. Silver rebounded to over $31, supported by safe-haven demand amid Russia-Ukraine tensions.
• US natural gas fell to $3.1/MMBtu after hitting $3.35, still up nearly 20% in November due to colder weather forecasts. European supply concerns increased LNG flows, limiting domestic supply.

Fixed income:

• Treasuries fluctuated as bunds gained following disappointing euro-area PMIs and a dovish ECB policy shift. The front end lagged, triggering a flattening trend after US PMI readings exceeded expectations. Additional support was provided to the long end of the curve following a $455k/DV01 block purchase in ultra-long bond futures.

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