MHMarkets：March 15, 2024 Economic Highlights

Date: March 15, 2024

Economic Highlights (GMT + 8)

7:30pm

USDEmpire State Manufacturing Index

9:00pm

USDPrelim UoM Consumer Sentiment

Market Overview

Global Market Recap

On Thursday, due to the U.S. February PPI growth rate significantly exceeding economists' consensus, recording the largest increase since August last year, the U.S. dollar index sharply rose, returning to above the 103 mark, eventually closing up 0.542% at 103.37. U.S. Treasury yields started low but moved higher, with the benchmark 10-year Treasury yield closing at 4.2922%, and the 2-year Treasury yield, most sensitive to Federal Reserve policy rates, closing at 4.6935%.

Due to the unexpectedly high U.S. PPI data dampening expectations for interest rate cuts, coupled with the strengthening of the U.S. dollar index, spot gold experienced fluctuations and declines, dropping to below the 2155 mark at one point, and finally closing down 0.51% at $2163.23 per ounce; spot silver closed down 0.79% at $24.81 per ounce.

With the International Energy Agency raising its forecast for this year's oil demand growth and lowering the supply outlook for countries outside the OPEC, international crude oil prices continued to rise. WTI crude broke through the $80 mark, closing up 1.64% at $80.97 per barrel; Brent crude closed up 1.39% at $85.59 per barrel.

U.S. stocks saw declines, with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.27%, and the Nasdaq down 0.3%. Tesla (TSLA.O) fell 4%, hitting a new low since May last year, with a market value of $510 billion. Nvidia (NVDA.O) fell 3.2%. The Nasdaq Golden Dragon China Index fell 2.7%, with Alibaba (BABA.N) nearly falling 4%, and both Bilibili (BILI.O) and XPeng Motors (XPEV.N) dropping more than 6%.

European stocks mostly fell, with the German DAX 30 index down 0.11%; the UK FTSE 100 index up 0.37%; the Euro Stoxx 50 index down 0.15%.

Hong Kong stocks opened higher but trended lower throughout the day. By the close, the Hang Seng Index was down 0.71%, the Hang Seng Tech Index was down 1.44%, and the Hang Seng Index's total trading volume reached HK$113.13 billion. On the market, gold stocks, oil stocks, online education stocks, and mainland real estate stocks led gains, while the “WuXi AppTec group” generally fell, and biotechnology, Apple concept, semiconductor equipment, and insurance stocks were among the top losers. In terms of individual stocks, Tigermed (03347.HK) rose 20.61%, China Rare Earth (00769.HK) rose 11.11%, Brilliance China (01114.HK) rose 9.37%, China Gold International (02099.HK) rose 6.21%, WuXi AppTec (02359.HK) fell 12.12%, Zhihu (02390.HK) fell 6.66%, and Bilibili (09626.HK) fell 3.83%.

The A-share major indexes opened mixed, maintaining a fluctuating trend in the morning; the indexes continued to weaken in the afternoon, with the ChiNext Index at one point falling more than 1%. The decline narrowed towards the close. By the close, the Shanghai Composite Index was down 0.18%, the Shenzhen Component Index was down 0.52%, and the ChiNext Index was down 0.64%. On the market, tourism, non-ferrous metals, oil, environmental protection, and pharmaceutical sectors led the gains, while internet, media and entertainment, telecommunications equipment, semiconductors, Sora concept, and flying car sectors were among the top losers. The trading volume of the Shanghai and Shenzhen stock markets exceeded 1 trillion yuan for the fourth consecutive trading day.

Market Highlights:

· U.S. Retail Sales Weak in February

· U.S. February PPI Sees Largest Increase Since August Last Year

· ECB's Stournaras: A Soft Landing Has Been Achieved

· IEA: Oil Supply and Demand Expected to Shift to a “Slight Deficit” in 2024

· People's Bank of China Party Committee: Maintain Reasonably Ample Liquidity

· Ministry of Commerce Responds to U.S. Legislation Against TikTok

· Ministry of Commerce: Accelerate Revision of the National Negative List for Foreign Investment

· State Administration for Market Regulation: Continue to Deepen Reform of the Subscription System for Registered Capital

Institutional Views:

1. Bank of America (BofA)

Bank of America predicts that the Bank of Japan (BoJ) is nearing a significant policy shift, with a strong indication expected to signal a change by the April meeting. This strategic announcement is anticipated to provide clear guidance on the central bank's intentions, showcasing its commitment to initiate changes and depart from previously unclear signals.

2. SocGen

SocGen observes an unusual quiet in the FX market, even as significant policy changes loom, particularly from the BoJ. The market's calm sentiment and low volatility levels stand out, with the only potential for surprise being a rate cut by the SNB. This lull could be the calm before more substantial market shifts, especially if unforeseen outcomes arise from these central bank meetings.

3. ING

Despite short-term US Treasury yields hinting at a possibly stronger dollar, the market's reaction, especially regarding EUR/USD, has been mixed. This inconsistency indicates that currency strength may be shaped by more than just yield movements. ING's analysis sheds light on the intricate relationship between interest rates and currency valuations, emphasizing that traders should take into account a variety of influences when assessing currency trends.

4. Goldman Sachs

Goldman Sachs offers strategic advice for navigating the currency trading landscape amidst evolving economic conditions, with a special focus on the unique status of the US Dollar. They advocate for a tactical trading stance towards the USD, emphasizing the importance of being versatile and responsive in the currency markets. This approach suggests that traders need to be ready to modify their strategies in light of changing trends and constraints affecting USD pairs.

5. RBC

Given the expected stability of the US dollar, the Reserve Bank of Australia's (RBA) prudent approach, and the neutral effects of China's economic environment, RBC forecasts a period of sideways trading for the AUD/USD, with a mild downward trend. This view highlights the combined influence of both domestic and global elements on the direction of the currency pair in the short to medium future.