MHMarkets：February 27, 2024 Economic Highlights

Date: February 27, 2024

Economic Highlights (GMT + 8)

9:30pm

USDDurable Goods Orders m/m

USDCB Consumer Confidence

Market Overview

Global Market Recap

On Monday, the U.S. dollar index started high but ended lower, closing down 0.166% at 103.78. U.S. Treasury yields fell, with the yield on the benchmark 10-year Treasury note slightly declining in the Asian trading session before rebounding in the European session, closing at 4.281%. The yield on the 2-year Treasury note, which is most sensitive to Federal Reserve policy rates, closed at 4.279%.

Due to the reduced likelihood of an early interest rate cut in the United States, spot gold experienced volatile declines, finding support and rebounding at the $2025 level, but ultimately closed down 0.21% at $2031.26 per ounce. Spot silver opened lower and fell sharply during the European session, closing down 1.88% at $22.52 per ounce.

Concerns over U.S. sanctions against Russia and escalating tensions in the Red Sea contributed to a recovery in international oil prices. WTI crude oil closed up 1.28% at $77.78 per barrel, while Brent crude oil closed up 1% at $82.48 per barrel.

U.S. stocks saw declines, with the Dow Jones Industrial Average down 0.16%, the S&P 500 down 0.38%, and the Nasdaq down 0.1%. Cryptocurrency-related stocks led the market, with Coinbase (COIN.O) surging over 16% and Marathon Digital (MARA.O) up nearly 22%. Arm (ARM.O) increased nearly 10%, while Google (GOOG.O) fell over 4%. The Nasdaq Golden Dragon China Index rose 0.72%, with Li Auto (LI.O) up 18.7% post-earnings, XPeng Motors (XPEV.N) up nearly 7%, and NIO Inc. (NIO.N) up nearly 5%.

European stocks were mixed, with the German DAX30 index slightly up by 0.02%, the UK's FTSE 100 index down by 0.29%, and the Euro Stoxx 50 index down by 0.17%.

Hong Kong stocks opened lower and continued to decline, with the Hang Seng Index closing down 0.54% at 16,634.74 points. The Hang Seng Tech Index was down 0.19% at 393.29 points. At the close, the total trading volume of the Hang Seng Index was HK$83.546 billion. Sectors such as K12 education, CXO concept, and retail stocks led the gains, while automobile stocks strengthened, the Evergrande group surged, but domestic banks, Chinese brokerages, and insurance stocks performed poorly. In terms of individual stocks, NIO Inc. (09866.HK) fell 4.6%, Li Ning (02331.HK) fell 3.8%, Baidu (09888.HK) fell 2.2%, China Life Insurance (02628.HK), and Ping An Insurance (02318.HK) both fell more than 2%, while Evergrande Auto (00708.HK) surged 17%, Evergrande Property Services (06666.HK) jumped 34.6%, and Lenovo Group (00992.HK) rose 4%.

The A-share market saw weak fluctuations among the three major stock indices, with the Shanghai Composite Index and the ChiNext Index both dropping more than 1% at one point. By the close, the Shanghai Composite Index was down 0.93%, the Shenzhen Component Index barely changed, down 0.04%, and the ChiNext Index was down 0.37%. On the market, industrial mother machine concepts surged, with more than 20 stocks hitting the daily limit. Sectors such as new industrialization, automotive dismantling, reducers, robotics, integrated die casting, home appliances, warehousing and logistics, automotive, and environmental protection all saw significant gains. In contrast, insurance, banking, coal, transportation facilities, electricity, liquor, and special estimation concepts were among the biggest losers. Over 3600 stocks advanced in the market, with trading volume approaching 990 billion yuan.

Market Highlights:

· European Central Bank Governing Council member Stournaras anticipates the timing for interest rate cuts

· Palestinian Prime Minister announces the resignation of the Palestinian government

· Ukrainian side: Plans to launch a new attack on the Crimea bridge

· U.S. Department of Energy seeks to purchase 3 million barrels of oil

· India is considering imposing an export tax on low-grade iron ore

· Bitcoin surpasses the $54,000 mark

· The U.S. imposes sanctions on several Chinese entities due to Russia-related factors

· Minister of Commerce Wang Wentao meets with the U.S. Trade Representative

Institutional Views:

1. Goldman Sachs

Goldman Sachs' assessment highlights the Reserve Bank of New Zealand's (RBNZ) careful approach in response to changing economic circumstances, indicating a possible divergence from what the markets anticipate, which may affect the New Zealand Dollar (NZD) in the near future. Attention is centered on how worldwide economic developments bear on domestic policy choices, underscoring the complex equilibrium that central banks must maintain when modifying monetary policy.

2. Credit Agricole

Credit Agricole's analysis indicates that while the EUR/USD currency pair has seen a recovery, its present value modestly surpasses what fundamental reasons can justify. The bank adopts a neutral outlook on this pair, emphasizing that changes in key economic differentials will be crucial for any notable future increase in value. This cautious viewpoint towards the EUR/USD pair takes into account the positive aspects that have already been factored into its pricing.

3. HSBC

HSBC interprets the recent decoupling of the GBP/USD currency pair from overall risk sentiment as a sign of stabilization, suggesting that it is less susceptible to the volatility of global equity markets. This analysis sets the stage for an expectation that the GBP/USD will continue to operate within its existing trading range. The movements of this currency pair are anticipated to be less swayed by changes in risk appetite and more by factors directly affecting either the British Pound (GBP) or the US Dollar (USD).

4. MUFG

MUFG suggests that the forthcoming Reserve Bank of New Zealand (RBNZ) meeting will be pivotal in determining the short-term direction of the New Zealand Dollar (NZD). If the RBNZ's decisions align with market anticipations of further rate increases, it could uphold the NZD's attractiveness due to its high yield. On the other hand, if the RBNZ does not support a more aggressive (hawkish) stance, this could jeopardize the recent advancements of the NZD. The success of G10 FX carry trades in the near future is expected to heavily rely on the signals given by the RBNZ regarding its policy intentions.

5. Danske Bank

Danske Bank, against the backdrop of differing monetary policy forecasts between the European Central Bank (ECB) and the Federal Reserve (Fed), recommends a strategy of selling the EUR/USD currency pair during upward movements. The bank expects that the short-term trajectory of this pair will be shaped by upcoming inflation figures and statements from central banks. With the persisting divergence in monetary policies, a stronger US Dollar (USD) is anticipated, highlighting a prudent approach to the EUR/USD amidst the prevailing market conditions.