MHMarkets：February 5, 2024 Economic Highlights

Date: February 5, 2024

Economic Highlights (GMT + 8)

9:45am

CNYCaixin Services PMI

11:00pm

USDISM Services PMI

Market Overview:

Global Market Recap

On Friday, U.S. stocks surged to record highs despite the stronger-than-expected jobs data, which tempered expectations of a rate cut. The Dow Jones Industrial Average rose by 134 points (0.35%) to 38,654, the S&P 500 gained 52 points (1.07%) to 4,958, and the Nasdaq 100 jumped 298 points (1.72%) to 17,642. This marked the fourth consecutive week of gains for all three major indexes.

The U.S. official jobs report for January revealed an addition of 353,000 non-farm payrolls, surpassing the expected 175,000, while the jobless rate remained steady at 3.7%. Wages also exceeded expectations, increasing by 0.6% on a monthly basis. Simultaneously, the U.S. 10-year Treasury yield spiked by 16.1 basis points to 4.024%. Consumer cyclicals, technology, and financial stocks led the market higher, whereas utilities and real estate sectors faced downward pressure.

Meta Platforms (META) experienced a significant surge of 20.32%, reaching a record close at $474.99, following robust quarterly results, the announcement of its inaugural dividend payment, and a $50 billion share buyback. Amazon.com (AMZN) posted a 7.87% gain on better-than-expected fourth-quarter results, while Apple (AAPL) closed 0.54% lower due to disappointing China sales figures.

In Europe, the DAX 40 rose by 0.35%, the CAC 40 increased by 0.05%, and the FTSE 100 slipped by 0.09%. U.S. WTI crude-oil futures declined by $1.69 (-2.29%) to $72.13 a barrel, and the price of gold fell by $18 (-0.89%) to $2,036 an ounce.

The U.S. dollar strengthened globally, driven by robust labor data and rising Treasury yields. The dollar index climbed to 103.91. EUR/USD fell by 81 pips to 1.0791, and USD/JPY increased by 188 pips (1.28%) to 148.30. GBP/USD slid by 108 pips (-0.85%) to 1.2634, while AUD/USD dropped by 55 pips (-0.84%) to 0.6514. Australia's morning data indicated a narrowed trade surplus of A$10.96 billion in December, with exports growing by 1.8% on a monthly basis. USD/CHF gained 88 pips (1.03%) to 0.8662, and USD/CAD climbed by 73 pips (0.55%) to 1.3457. Bitcoin continued to trade around the $43,000 level.

Market Highlights:

· The number of initial jobless claims in the United States unexpectedly increased last week.

· The Bank of England voted with a more hawkish stance than expected.

· OPEC+ is maintaining its unchanged policy on oil production.

· There are rumors that a ceasefire agreement between Hamas and Israel is expected.

· The assets of U.S. money market funds reached $6 trillion for the first time.

· Yi Gang: It is necessary to use all possible means to increase the capital investment of the entire society.

· In 2023, the stamp duty on securities transactions is expected to decrease by more than 34% year-on-year.

· In one night, over 300 companies issued announcements to increase their holdings and buybacks.

Institutional Views:

1. CIBC:

CIBC views the January jobs report as a strong sign of the enduring strength in the US labor market, indicating a reduced urgency for the Fed to implement rate cuts. According to this analysis, the initiation of policy easing is expected in the latter half of the year, relying on the ongoing resilience of the labor market and progress toward inflation targets. The insights from the report prompt a reassessment of the immediate economic outlook, giving the Fed flexibility to adopt a deliberate and cautious approach to policy normalization amid sustained robustness in the labor market.

2. Bank of America:

BofA's baseline anticipates a weakening USD against the backdrop of slowing US growth and forthcoming Fed rate cuts. The bank remains alert to a variety of alternative scenarios that could diverge significantly from current forecasts. BofA commits to reevaluating its stance should the likelihood of these alternative outcomes increase, reflecting the complex and interconnected nature of global economic factors impacting the EUR/USD exchange rate.

3. Royal Bank of Canada:

RBC's analysis indicates a significant change in the BoE MPC's perspective, with an accelerated timeline for rate cuts in 2024, showcasing a more prompt response to shifting economic conditions. This updated stance underscores the MPC's preparedness to adjust monetary policy in response to evolving economic indicators while upholding its characteristic caution. As the MPC manages these adaptations, RBC's projections provide insights into the potential trajectory of UK monetary policy and its repercussions for financial markets.