MHMarkets：February 28, 2024 Economic Highlights

Date: February 28, 2024

Economic Highlights (GMT + 8)

8:30am

AUDCPI y/y

9:00am

NZDOfficial Cash Rate

NZDRBNZ Monetary Policy Statement

NZDRBNZ Rate Statement

9:30pm

USDPrelim GDP q/q

Market Overview

Global Market Recap

On Tuesday, as investors awaited more U.S. economic data, the Dollar Index fluctuated before closing up 0.037% at 103.81. The benchmark 10-year U.S. Treasury yield fell in the Asian session and rebounded in the European session, ultimately closing at 4.308%. The 2-year U.S. Treasury yield, most sensitive to Federal Reserve policy rates, ended at 4.701%.

Concerns over a rebound in U.S. inflation data put pressure on gold and silver prices. Spot gold failed to breach the $2040 level, erasing all its intraday gains in the U.S. session to narrowly hold above $2030, closing down 0.06% at $2030.11 per ounce; spot silver ended down 0.27% at $22.46 per ounce.

International crude oil prices recovered slightly due to news that OPEC+ is considering extending voluntary production cuts to the second quarter. WTI crude closed up 1.2% at $78.71 per barrel; Brent crude ended up 0.75% at $83.28 per barrel.

U.S. stocks saw mixed results: the Dow Jones Industrial Average fell 0.25%, the S&P 500 Index rose 0.17%, and the Nasdaq Composite increased by 0.37%. Apple (AAPL.O) closed up 0.8%, Coinbase (COIN.O) rose 2.7%, and MicroStrategy (MSTR.O) surged over 9%. The Nasdaq Golden Dragon China Index rose 2.1%, with Li Auto (LI.O) continuing its previous day's momentum, closing up 11.8%, near its all-time high set in November 2020. BeiGene (BGNE.O) rose 12%, and NetEase (NEST.O) increased by 5%.

European stocks were mixed, with Germany's DAX 30 index closing up 0.76%; the UK's FTSE 100 index slightly down by 0.02%; and the Euro Stoxx 50 index up by 0.44%.

Hong Kong stocks fluctuated in the morning session before rising in the afternoon, led by auto and semiconductor stocks. The Hang Seng Index closed up 0.94% at 16790.8 points. The Hang Seng Tech Index rose 3.24% to 3503.17 points. At the close, the total trading volume of the Hang Seng Index reached HK$1026.01 billion. Semiconductors and automobile stocks were strong throughout the day, while technology stocks rebounded towards the close, but road transportation and dairy sectors fell. Individual stocks like Li Auto (02015.HK) surged 25.45%, BYD Company (01211.HK) increased by 5.32%, Shanghai Fudan (01385.HK) jumped 23.1%, SMIC (00981.HK) rose 10.2%, ZTE Corporation (00763.HK) gained 10.6%, and Hua Hong Semiconductor (01347.HK) went up by 7.7%, while Dingyi Group Investment (00612.HK) and Oriental Selection (01797.HK) dropped by 23.6% and 3.9%, respectively.

In the A-share market, the three major stock indices started low but moved higher throughout the day. The Shanghai Composite Index closed up 1.29%, regaining the 3000 point level; the Shenzhen Component Index rose 2.24%, and the ChiNext Index increased by 2.41%. Sectors such as PEEK materials surged, with several stocks hitting the upper limit; 6G concept stocks strengthened in the afternoon, and CPO concepts soared, with Tianfu Communication hitting a record high. Sectors like computing power leasing, liquid cooling servers, optical communications, satellite navigation, information security, automotive, semiconductors, warehousing & logistics, and real estate all saw significant gains. Over 4800 stocks in both markets advanced, with a total trading volume of 990 billion yuan.

Market Highlights:

· Fed's Bowman: Lowering interest rates too soon may necessitate later increases

· US durable goods orders in January saw the largest decrease since April 2020

· Sources: OPEC+ to consider extending voluntary production cuts to Q2 or end of the year

· Hamas: Biden's remarks do not reflect reality

· US close to reaching an agreement to avoid government shutdown

· People's Bank of China: Make full and effective use of monetary policy tools

· NVIDIA says increased US restrictions on chip exports will harm its competitiveness

Institutional Views:

1. Goldman Sachs

Goldman Sachs' evaluation of the EUR/USD exchange rate indicates that it is likely to persist within its existing trading boundaries for the short term, with substantial fluctuations anticipated to result from significant policy adjustments or variations in the economic health of the Eurozone and the United States. The company recommends that investors exercise prudence and stay alert, pointing out the potential risks that could impact the currency pair positively or negatively. This review emphasizes the intricate relationship between economic signals, policy measures, and investor sentiment in determining the value of currencies.

2. Credit Agricole

Credit Agricole's forecast presents a nuanced outlook on a general trend towards moderate USD depreciation against a range of currencies, with particular focus on the AUD/USD and USD/CAD pairs as ones to monitor closely. This projection, informed by the interaction of February's equity market movements and the USD's trajectory, provides critical insights for investors and traders aiming to refine their approaches in light of anticipated market changes. The analysis goes beyond merely pinpointing expected movements in currency values; it also stresses the significance of integrating global equity trends and foreign exchange fluctuations into decisions regarding month-end portfolio adjustments.

3. HSBC

HSBC's analysis points out that the latest inflation figures from Japan not only emphasize the likelihood of a significant policy adjustment by the Bank of Japan (BoJ) but also signal a chance for the Japanese Yen (JPY) to strengthen. The bank's ongoing advice to bet against the EUR/JPY is based on the forecast of continued JPY fortification, anticipating the market's reaction to a potential conclusion of the BoJ's extremely loose monetary stance. This recommendation is in harmony with the market trends observed after the inflation data was published, indicating a tactical opportunity for investors in the forex markets.

4. MUFG

MUFG's review suggests an impending major policy shift by the Bank of Japan (BoJ), possibly occurring as early as their March meeting, signaling an end to the era of negative interest rates. This expected pivot is interpreted as a reaction to domestic economic signals, such as trends in wages and worries over the value of the currency, alongside external market forces, including the increase in yen-denominated carry trades. An advance in interest rates might be intended to stabilize the yen and realign Japan's monetary policy to better suit changing economic landscapes.