MHMarkets：August 29, 2023 - Fundamental Reminder

☆07:30 JPY Unemployment Rate (JUL)

☆14:00 EUR Germany GFK Consumer Confidence (SEP)

☆21:00 USD FHFA House Price Index MoM (JUN)& USD S&P/Case-Shiller Home Price YoY (JUN)

☆22:00 USD JOLTs Job Openings (JUL)& USD CB Consumer Confidence (AUG)

☆The next day at 04:30 USD API Crude Oil Stock Change (AUG/25)

Market Overview

Review of Global Market Trend

Markets continued to digest last week's Powell speech on Monday, with bets on a 51% chance of a 25 points rate increase in November, up from 33% a week earlier. In addition, we can await a series of blockbuster data this week. Besides, ADP data and non-farm data are expected to decline from the previous value. The dollar index was last down 0.15% at 104.02.

Treasury yields ticked lower, with the 10-year yield at one point falling nearly 5 basis points to 4.19% before closing near 4.21%; The yield on the two-year Treasury note rose as much as 5 basis points on the day to 5.1% and settled near 5.05%, still hovering at its highest in more than six weeks since July 6.

Spot gold benefited from a decline in the dollar and Treasury yields, rising as high as $1,926.14 an ounce before closing up 0.3 % at $1,920.19 an ounce. Spot silver closed up 0.05% at $24.23 an ounce.

Crude oil rose as U.S. Gulf crude production was threatened by a tropical storm and news that Saudi Arabia may extend production cuts. WTI crude rose as high as $80.7 a barrel, but failed to hold the $80 mark and closed down 0.03% at $79.94. Brent crude rose as high as $84.69 a barrel, down 0.42% at $83.78 a barrel.

Three major U.S. stock indexes closed higher, the Dow Jones industrial average closed up 0.62%, the nasdaq closed up 0.84% and the s&p 500 index rose 0.62%. Chinese stocks outperformed the market, the HXC index closed up 2.2%. Alibaba, Baidu and JD rose by more than 2.5%. Nvidia closed up 1.8% and VinFast, a Vietnamese electric-vehicle maker, rose nearly 20% to another record close, with a combined market value of about $190 billion.

Major European stock indexes closed higher the whole line, with Germany's DAX30 up 0.39% and the Euro Stoxx 50 up 1.36%. The London Stock Exchange in Britain was closed.

Market Focus

1. Binance is reportedly considering exiting the Russian market.

2. White House: US President Joe Biden will travel to Vietnam on September 10.

3. Chevron Australia LNG plant to go on strike Sept. 7

4. VinFast, a Vietnamese electric-vehicle maker, hit another record close with a market capitalization of about $190 billion.

5. Putin has informed Indian Prime Minister Narendra Modi that he will not be able to attend the G20 summit in New Delhi.

6. Trump's 2020 election trial date is scheduled for March 4, the day before 14 US states hold primary elections.   

Geopolitical Situation

Conflict Situation

1. Moscow Mayor: Russian air defense systems shot down a drone near Moscow.

2. Ukraine's deputy defense minister: The southeastern village of Robotne was out of control and Ukrainian forces were trying to advance further.

3. Officials appointed by Russia say two drones have been shot down in Crimea.

4. Russian Defense Ministry: Russia destroyed a Ukrainian missile in the Black Sea.

5. Mr. Zelensky: We don't rule out political pressure to force Russia to withdraw from Crimea, but Ukraine must regain control of its administrative border with the peninsula.

6. According to Ukrainolskaya Pravda: Germany and Greece approached with a proposal that Greece transfer 100 Leopard 1A5 tanks to Ukraine, and Greece will receive upgraded armored vehicles.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs：Hedge funds have record exposure to the seven biggest tech stocks by market value】

Aug 29 - In a week when Nvidia (NVDA.O) shares hit new highs after reporting revenue that beat expectations, hedge funds had record exposure to the seven largest technology stocks by market capitalization, data from Goldman Sachs showed on Friday. Together, the seven largest U.S. stocks now account for about 20% of the net value of stocks held by hedge funds tracked by Goldman. These giants have also contributed to the broader market's rally this year. As of Aug. 24, the funds held a record percentage of their holdings in seven of the biggest tech stocks, led by Apple Inc., suggesting that hedge funds are building their positions not just through index products but by buying shares in those companies. “Hedge funds continue to chase to the super market technology and artificial intelligence related stocks,” Goldman's prime brokerage business department said in a report issued to a specific customer base.

02

SOCIETE GENERALE

【SOCIETE GENERALE：The dollar remains the most popular currency】

August 24 - Although currency markets are still in the summer doldrums, the US dollar is still the top dog in the market, said Kit Juckes, chief global FX strategist at Societe Generale. In August, dollars all the way higher, and is expected to continue to rise, until the BOJ takes action (They will not meet again until September 22nd). Either European data (unlikely) gets better or US data be weak or Fed officials adopting a more cautious tone at Jackson Hole.

03

MUFG

The BOJ bond buying speed record The necessity of increasing yield curve control policy

The BOJ has bought government bonds at a record pace this year, which may be one factor prompting the bank to allow yields to fluctuate in a wider range in the near term, reducing pressure on it to keep long-term rates under control. The BOJ hasn't significantly reduced its bond purchases after widening the yield-curve band in December and last month, and the ramp-up after each change raises questions about whether the central bank is moving too slowly to adjust policy and would have to go too far to stop investors from pushing yields too high. Naomi Muguruma, chief fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities, said that if the BOJ reduced its bond purchases, market participants would take it as a signal that it was close to exiting its easing policy, pushing yields higher and forcing it to buy more.