2024-10-08 12:02

Key takeaways Surging exports are providing a powerful boost to growth across much of ASEAN… …while foreign direct investment continues to remain a bright spot for the region Easing inflation and interest rates should provide a cushion beyond the Year of the Dragon. Indonesia looks to pick up a little steam as well next year, though it will need to heed the pitfalls of easy choices and fiscal slippage to make gains stick for the long term. Things are also ticking up in Thailand, as a new government gets to work, and the tourism recovery continues apace. Malaysia is riding the wave of inward investment, though growth may cool at the margin over the coming year. Singapore, meanwhile, is chugging along, with its growth so far this year better than hoped, though slower global trade could soon add a little drag. The Philippines is taking a little breather this year, before revving up again in 2025 as inflation tumbles and spending power increases. Vietnam has overcome its dip in growth, helped by a robust external sector, while local demand is reviving. Economy profiles Key upcoming events Source: Refinitiv Eikon, HSBC Indonesia A new innings Following the election in February, the General Election Commission (KPU) announced in March that Prabowo Subianto has won an outright majority, garnering 58.6% of the votes, and is set to be Indonesia’s next president, starting on 20 October. All eyes are now on the key people and policies the new government champions. The continued presence of technocrats in key ministerial posts would signal a desire to push ahead with reforms, and the final legislative count will determine the parliamentary muscle power behind potential reforms. Prabowo has spoken at length about continuing current President Jokowi’s reforms – embarking on down-streaming 2.0 and continuing the infrastructure build-out. However, we believe there will be challenges along the way: for instance, slower global demand for nickel electric vehicle (EV) batteries, lowering Indonesia’s carbon footprint, and restructuring certain state-owned enterprises (SOEs). Prabowo has outlined plans to upgrade defence systems and enhance social welfare schemes (in particular a new free lunch programme at schools). The challenge is to keep a lid on the fiscal deficit and hold on to Indonesia’s well-maintained macro stability over the next five years. We do believe that a decade of reforms has put in place several buffers that would help keep the house in order, at least in the short term. For instance, better infrastructure and lower logistics costs will likely keep a lid on core inflation, as has been clear in recent months. Supply-side reforms could help further control the rise in food inflation. And rising exports of processed metals will likely keep the external deficits manageable. For now, however, growth is rather weak. Q2 GDP was 7.8% below pre-pandemic trend levels. The contraction in July and August PMIs suggest that activity weakened into Q3. As Bank Indonesia (BI) cuts rates, the new government takes over and announces its vision, thereby lowering policy uncertainty, and FDI inflows waiting on the side-lines flow in, we believe growth prospects could improve. We expect GDP growth to rise from 5% in 2024 to 5.3% in 2025 and 2026. Our growth model suggests that switching to loose fiscal and monetary policy could help raise growth, but only partially. Moving further up the manufacturing value chain, and graduating from exporting just ores and metals, to exporting EV batteries and EVs, and thereby reducing the impact of commodity price shocks on the economy, could push potential growth to 5.8% by 2028. PMI Manufacturing has slipped into contraction Source: CEIC, HSBC Inflation is well below BI’s 2.5% target Source: CEIC, HSBC Malaysia At full steam After slow growth in 2023, Malaysia’s economy has been roaring again, expanding by 5.1% y-o-y in 1H24. The momentum has also been impressive, hitting 2.9% q-o-q, seasonally adjusted, in 2Q. Beyond strong headline numbers, what is more encouraging is the breadth of the recovery. For one, the long-anticipated revival in manufacturing is rather outstanding. Albeit delayed compared to peers, Malaysia’s manufacturing and trade sectors have finally turned the corner, riding the global tech upturn. After a long stretch of annual declines, electrical and electronics shipments returned to growth on a three-month moving average basis, albeit this remains at a nascent stage. Meanwhile, there is a mixed performance in commodities, with palm oil and LNG exports leading. In addition to manufacturing, what was a great surprise is the performance of construction, which expanded by a double-digit y-o-y pace for the second consecutive quarter. Coupled with the expenditure side of the gross fixed capital formation data, this is not only related to the government’s recent increase in public investment but also reflects rising interest in FDI-related large-scale projects. Meanwhile, services continue to show strength. Not only has private consumption shown resilience, but tourism has also added much-needed fuel, as Malaysia has welcomed tourists equivalent to 90% of its pre-pandemic levels. Given the upside surprise in 2Q, we recently upgraded our GDP growth for 2024 to 5.0% (previously: 4.5%), while keeping 2025 growth at 4.6%. Outside of growth, inflation pressure remains largely muted, despite diesel subsidy rationalization in June. Headline inflation averaged around 1.8% y-o-y in the first seven months of the year. Even after taking into account unfavourable base effects, we expect manageable inflation. We forecast inflation at 2.3% in 2024 and 3.0% in 2025, though acknowledge uncertainty from the potential subsidy rationalisation on the petrol RON95. Our base case is for Bank Negara Malaysia (BNM) to keep its policy rate steady at 3.0% for a prolonged period. As long as inflation falls within BNM’s 2-3.5% forecast range, we do not expect the central bank to move. That said, the risk of a hike is higher than a cut in Malaysia, compared to regional peers. Malaysia has seen a near-full recovery in mainland Chinese tourists Source: CEIC, HSBC. Note: YTD is July for all except MA (June). Inflation has remained manageable, providing room for BNM to stay on hold Source: CEIC, HSBC Philippines Red-eye flight to easing The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), embarked on its easing cycle in August, cutting its policy rate by 25bp to 6.25% – even before the Federal Reserve (Fed) had lowered its policy rate. It is good to look back to see how impressive this was. From 2022 to 2023, not only was inflation in the Philippines the highest in ASEAN, but the economy’s current account deficit was as wide as it was in the run-up to the Asian Financial Crisis. Many, including HSBC, thought that monetary policy in the Philippines had the least independence from the Fed when compared to others in ASEAN. However, the Philippines in 2024 held itself together and turned the corner. The authorities cut the tariff for rice – the country’s most ubiquitous staple – from 35% to 15%, setting the stage for headline inflation to ease to below 3% y-o-y, or to within the lower bound range of the BSP’s 2-4% target band. The current account deficit is also moderating at a pace faster than expected, thanks to the economy’s Business Process Outsourcing (BPO) sector booming over the past year. This provides the BSP with inflows to help strengthen the peso and some support to wiggle away from the Fed. And, given how far inflation can still ease, the BSP already signalled that more rate cuts are to come. The easing cycle comes at a good time. Although growth in the Philippines has held up relative to the rest of Asia, some cracks are already showing. For instance, growth in household consumption dipped to its lowest level since the Global Financial Crisis, barring the COVID-19 pandemic, while growth in durable equipment investment has fallen for the second consecutive quarter. Credit in the economy also remains weak with the cost of borrowing high. That said, we expect the BSP’s easing cycle to reinvigorate small- to medium-scale investments and reduce the debt burden of households, bolstering growth in 2025 and 2026. We are even more bullish on next year’s prospects, with the tariff rate cut on rice potentially freeing-up 1.1% of the economy for growth. With inflation on its way down but nothing terrible happening to GDP, we expect the BSP’s easing cycle to be gradual. We expect only one more 25bp rate cut (to 6.00%) in 2024 and pencil in a total of 100bp worth of rate cuts in 2025, bringing the year-end policy rate to 5.00%. We think the easing cycle will end in 2025, so we expect the policy rate to remain at 5.00% throughout 2026. Due to the tariff reduction on rice, we expect inflation to be below 3% in 2025 Source: CEIC, HSBC. Note: Grey area represents HSBC forecasts. The services trade surplus widened in 2023-24 due to a boom in BPO exports Source: CEIC, HSBC Singapore A mixed bag Singapore has made good progress in its economic recovery in 2024. While the possibility of a technical recession was still on the cards in 2Q23, the recovery momentum continues, helping Singapore to emerge from a severe downturn in the trade cycle to see healthy growth of c3% y-o-y in 1H24. While manufacturing remained in contraction, the magnitude was much smaller, and it is also a mixed story. The culprit was falling pharmaceutical output, which is volatile in nature, and could swing back to growth later. Electronics output still saw a decent recovery, though the pace lags behind other tech-exposed economies like Korea and Taiwan. But this is because they have heavier exposure to Artificial Intelligence (AI)-related production, and Singapore is set to ride a broader recovery in consumer electronics. Despite still subdued manufacturing activity, better-than-expected services came to the rescue. But it is also a mixed bag. On a sequential basis, domestically oriented sectors fared better, while consumer-facing and travel-related ones saw large corrections in 2Q. But this was largely expected, as a busy line-up of large-scale international concerts was concentrated in 1Q. That said, there is still potential to grow further. Singapore has welcomed visitors equivalent to almost 90% of 2019’s level in 1H24. July saw for the first time the return of Chinese tourists exceeding the monthly 2019’s level. All in all, we recently upgraded our growth forecast to 3.0% (previously: 2.4%) for 2024 and maintain our 2025 growth forecast at 2.6%. In addition, the disinflation progress also continues with core inflation decelerating to 2.5% y-o-y in July. Services inflation like education and healthcare continued to trend down, but entertainmentrelated costs barely budged. Most importantly, fuel and utilities cost momentum was muted, and oil prices are likely to stay relatively range-bound for now. As such, we recently revised down our core inflation forecast to 2.8% for 2024 (previously: 3.1%) and 1.9% for 2025 (previously: 2.2%). Despite cooling inflation, we do not believe this will prompt the Monetary Authority of Singapore (MAS) to ease anytime soon; at least inflation trends on their own may not be enough to warrant an easing bias from the MAS. Singapore’s semiconductor NODX has rebounded to double-digit growth Source: CEIC, HSBC Core inflation has been consistently slowing Source: CEIC, HSBC Thailand It’s complicated Thailand’s GDP growth accelerated to 2.3% y-o-y in 2Q 2024, with its fiscal engines finally up and running, despite delaying the release of its budget for six months. The manufacturing production index in July also at last turned positive after falling for roughly 21 months, while goods exports leaped by 21.8% y-o-y as Thailand benefitted from the global tech upcycle. This coincides with the PMI new orders index, which just turned expansionary for the first time in 12 months back in July. All in all, it seems the economy is finally revving up. We expect Thailand to stage a V-shaped recovery for the remainder of 2024, growing 2.7% and 3.7% y-o-y in 3Q and 4Q 2024, respectively. However, a lot happened before the economy got to where it is now. Amidst tough competition from mainland Chinese imports, headline inflation dropped back to below the Bank of Thailand’s (BoT) 1- 3% target band, while the trade balance swung back into deficit. Thailand also saw its political landscape change quickly: in less than 48 hours after Srettha Thavisin was removed from office, parliament elected Paetongtarn Shinawatra as Thailand’s youngest Prime Minister in history. Although progress hasn’t been a straight line, the general direction is improving. In fact, amidst the political volatility, financial markets in Thailand finally ticked up after underperforming for 12 straight months. The SET index in September jumped for the first time this year, while the THB nominal effective exchange rate (NEER) is nearing its pre-pandemic levels. The Thai economy, however, isn’t all in the clear. Yes, government spending and tourism continue to fuel growth. But headwinds persist in manufacturing and consumption. Competition from mainland Chinese imports may limit how far manufacturing can improve while Thailand’s high household debt will likely be a major drag on private consumption. That’s the complicated part. Although headwinds are strong and inflation is weak, we do not expect the Bank of Thailand (BoT) to ease monetary policy from now until 2027. Keeping the policy rate at 2.50% should help guide Thailand’s much-needed deleveraging cycle, particularly on household debt. The SET index finally turned after the new government was formed in August Source: Bloomberg, HSBC Household debt is a structural issue that the authorities have prioritised to tackle Source: BIS, Macrobond, HSBC. CN – Mainland China, Em – Emerging, BZ – Brazil SA – South Africa, MX – Mexico, RU – Russia, and TU – Türkiye. Vietnam Waiting for further lift Vietnam’s economic recovery continues to firm up as the Year of the Dragon progresses. Growth improved and surprised on the upside in 2Q24, rising 6.9% y-o-y in 2Q24. The recovery in the external sector has started to broaden out beyond consumer electronics, although the pass-through to lifting the domestic sector still remains to be seen. For one, the manufacturing sector has emerged strongly from last year’s woes. PMIs have registered five consecutive months of expansion, while industrial production (IP) has registered a bounce-back in activity for the textiles and footwear industry as well. This has supported robust export growth at double digits, with structural forces, such as expanding market access for Vietnamese agricultural produce, also underway. However, the domestic sector is recovering more slowly than initially expected, with retail sales growth still below the pre-pandemic trend. Encouragingly, the government has put in place measures to support a wide range of domestic sectors that is expected to shore up confidence with time. Environment tax cuts on fuel and value-added tax cuts for certain goods and services will last until year-end 2024, while the revised Land Law effective from August will buttress the outlook for real estate. Albeit still early, the latter seems to have already contributed to a boost in foreign investment in the sector, with recent FDI showing broad-based gains. We believe the potential upside risks can offset the temporary economic disruptions from Typhoon Yagi. All in all, we forecast GDP growth at 6.5% for both 2024 and 2025. On inflation, price developments are turning more favourable in 2H24, as unfavourable base effects from energy have faded. An expected Fed easing cycle will also help to alleviate some exchange rate pressures. Taking all these into consideration, we forecast inflation at 3.6% in 2024 and 3.0% for 2025, both well below the State Bank of Vietnam’s target ceiling of 4.5%. Vietnam’s key exports continue to recover, with signs of broad-based growth Source: CEIC, HSBC Inflation moderated notably in August and is expected to remain well below target Source: CEIC, HSBC https://www.hsbc.com.my/wealth/insights/market-outlook/asean-in-focus/2024-10-08/

2024-10-08 07:05

Key takeaways US stocks were mostly higher; Treasuries edged lower。 European stocks and government bonds fell。 Asian stocks extended gains。 Markets US stocks traded mixed but mostly higher on Wednesday amid investor optimism over de-escalation of geopolitical tensions and upcoming corporate earnings releases. The S&P 500 rose 0.8%. US Treasuries edged lower after recent rebounds. 10-year yields rose 3bp to 4.28%. European stocks mostly fell on Wednesday as investors assessed the impact of geopolitical tensions and some downbeat earnings releases. The Euro Stoxx 50 lost 0.7%. The German DAX was little changed (+0.1%), while the French CAC closed 0.6% lower. In the UK, the FTSE 100 fell 0.5%. European government bonds fell. 10-year German and French bond yields both rose 2bp to 3.04% and 3.68%, respectively. In the UK, 10-year gilt yields rose 3bp to 4.81%. Asian stock markets extended gains on Wednesday, amid investor optimism over easing Middle East tensions. Japan’s Nikkei 225 rose 0.4% and Korea’s Kospi rallied 2.1%. China’s Shanghai Composite ended little changed while Hong Kong’s Hang Seng was up 0.3%. India’s Sensex gained 1.6%. Crude oil prices closed little changed on Wednesday. WTI crude for May delivery settled at USD91.3 a barrel. Key Data Releases and Events Releases yesterday No major releases. Releases due today (16 April 2026) In China, Q1 GDP growth was likely supported by strong January-February activity, particularly exports, and aided by front-loaded fiscal policy support. Industrial production is expected to hold up in March, with limited disruption from the energy shock so far, while retail sales likely softened as the LNY holiday boost faded and the high base from last year’s trade-in subsidies kicked in. In the US, the gradual recovery in industrial production will likely be dampened by higher oil prices going forward, but mining output may see a modest boost. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-daily/id/

2024-10-07 12:02

Key takeaways “Safe haven” currencies should be supported amid heightened geopolitical concerns. The USD has bounced back; but both the JPY and CHF weakened, probably reflecting local dynamics. The USD may be a better “safe haven” than the CHF or JPY. The USD has strengthened recently, as markets are digesting heightened geopolitical risks in the Middle East. At the same time, the recent dovish developments related to the European Central Bank (ECB) and the Bank of England (BoE) have also supported the USD, from the yield differential’s channel (Chart 1). Markets are currently fully priced for 25bp cuts at both the 27 October and 12 December ECB meetings (Bloomberg, 3 October 2024). In the UK, BoE Governor, Andrew Bailey, said policymakers could be a bit more aggressive and activist if inflation continues to decelerate (The Guardian, 3 October 2024). Unlike the USD, both the JPY and CHF have weakened lately, reflecting local dynamics. In Japan, markets are digesting comments from the new Prime Minister, Shigeru Ishiba, who said the economy is not ready yet for further interest rate hikes (Bloomberg, 2 October 2024). At the same time, the Bank of Japan (BoJ) Governor, Kazuo Ueda, said he would move cautiously when deciding whether to hike further (Bloomberg, 2 October 2024). The BoJ is widely expected to keep rates unchanged at its 31 October meeting. The attraction of the JPY as a “safe haven” currency may have to contend with the less hawkish tone from Japanese policymakers. That being said, our economists expect the BoJ to hike its policy rate to 0.5% in January 2025. With the prospect of monetary policy divergence between the Federal Reserve and the BoJ, USD-JPY is likely to decline moderately (Chart 2) over the medium term, in our view. Source: Bloomberg, HSBC Source: Bloomberg, HSBC Meanwhile, in his first speech as Swiss National Bank’s (SNB) president, Martin Schlegel, indicated that the central bank can intervene in currency markets if required and stands ready to lower interest rates again (Bloomberg, 2 October 2024). In other words, the SNB’s tolerance for CHF strength would likely have its limits. Perhaps, the USD is a better “safe haven” currency than the JPY and CHF amid heightened geopolitical risks, and in the run-up to the 5 November US elections. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/2024-10-07/

2024-10-07 07:05

Key takeaways Recent stimulus announcements have sparked a dramatic recovery in China’s stock market – making it the top performing global market this year… and perhaps the strongest example yet of the great rotations we’ve seen in markets in 2024. Back in March 2021, Banco Central do Brasil (BCB) became one of the first major central banks to start hiking rates in response to the pandemic surge in inflation. As a global leader in the policy cycle, could September’s BCB rate hike be a cautionary tale for the Fed, just as it kicks off its easing cycle? European stocks outperformed their US peers in Q3, helped by the ‘broadening out’ trade and their strong exposure to China, with investors seeking value outside the US. However, there is an intriguing disconnect between country-level macro data and profit growth expectations. Chart of the week – Emerging markets are back There were some remarkable twists and turns in the macro and market environment in Q3, and one of the biggest was the recent Politburo-endorsed package of support in China. That sparked a stunning rally in the country’s stocks, which reversed China’s laggard status this year, and put the overall performance of emerging market stocks at +19% year-to-date, slightly ahead of developed markets. Policy was a major focus during the quarter, with the Fed finally joining the global easing cycle with a 0.5% rate cut. The backdrop to that move is that the economy remains on course for a soft landing. Despite some bumps, inflation continued its retreat, but growth also cooled, with mixed employment data causing volatility at times, particularly in early August. In markets, a ‘great rotation’ in leadership was a strong theme. In developed markets, the ‘Magnificent 7’ were robust – rising around 4%, but there were more signs of a broadening out of returns and profit growth expectations across sectors and markets. Japan, Europe, and UK indices largely outperformed the US. And in the US itself, the small-cap Russell 2000 beat the S&P 500. Meanwhile, emerging market regions accelerated on a weakening US dollar and anticipation of rate cuts, with Asian regions setting the pace (see Market Spotlight), but Latam markets continued to lag. Across other asset classes, high quality fixed income performed as the global easing cycle progressed. Market Spotlight Emerging Asian assets lead in Q3 Stocks in mainland China and Hong Kong set the pace in Q3 – with a remarkable rally late in the quarter delivering gains of 23% and 24% respectively for MSCI indices. But even before that, weakness in the US dollar as Fed policy easing got started (and rate expectations were repriced) sparked a pick-up in the performance of EM Asian markets. ASEAN was notable, with the region’s MSCI index up 19% in Q3. That was driven by a rebound in foreign inflows in response to the favourable FX environment, regional monetary easing, and a resilient macro backdrop. Thailand, the Philippines, and Malaysia led the gains. Year-to-date, China, India, and Asia (ex-Japan) now lead global performance. EM Asian credits were also strong during the quarter, with Asia high yield a leading performer globally. In part, that was driven by well-performing names in markets like India and Indonesia. And from here, some specialists believe the default outlook is favourable with good funding access, strong balance sheets and a resilient macro backdrop for a vast majority of Asian companies. The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Past performance does not predict future returns. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. This information shouldn't be considered as a recommendation to buy or sell specific sector/stocks mentioned. Any views expressed were held at the time of preparation and are subject to change without notice. Source: HSBC Asset Management. Macrobond, Bloomberg. Data as at 11.00am UK time 05 October 2024. Lens on… China’s breathtaking rally Recent stimulus announcements have sparked a dramatic recovery in China’s stock market – making it the top-performing global market this year… and perhaps the strongest example yet of the great rotations we’ve seen in markets in 2024. The gains are impressive. But the starting point was one of serial underperformance, connected to concerns about nominal growth. On valuation measures like ‘earnings yield’, there had been a large ‘China discount’, which gave stocks room to move sharply on better-than-expected news. It meant the stimulus was ‘doubly good’ for the market because investor sentiment had been so bad. After a rally of historic proportions, some short-term caution is probably warranted. But the comprehensive liquidity measures mean that the ‘policy put’ is back. Further fiscal and credit stimulus will be crucial to make the market recovery sustainable, but China’s policy stimulus, combined with Fed jumbo cuts, improves the odds that the global economy will stick to a soft landing. Brazil – a warning for the Fed? Back in March 2021, Banco Central do Brasil (BCB) became one of the first major central banks to start hiking rates in response to the pandemic surge in inflation. As a global leader in the policy cycle, could September’s BCB rate hike be a cautionary tale for the Fed, just as it kicks off its easing cycle? Brazil’s recent switch to policy tightening came a year after the country’s leadership launched a public spending spree that fuelled domestic demand. Tight labour markets, a pick-up in wage growth, and a weaker Brazilian real have since proved inflationary. For some onlookers, there are similar risks lurking in the US. November’s US presidential election could result in a sizeable fiscal boost and shift tariff rates higher, while the US dollar remains on a weakening trend. The comparison is off the mark. The fiscal boost wouldn’t come until 2026, and the labour market and wider economy is cooling. But the potential shift in policies could mean a higher-than-expected endpoint for rates in this policy easing cycle, with consequences for longer-term investors. Conflicting signals for European profits European stocks outperformed their US peers in Q3, helped by the ‘broadening out’ trade and their strong exposure to China, with investors seeking value outside the US. However, there is an intriguing disconnect between country-level macro data and profit growth expectations. On the macro front, Europe is expected to grow in 2025, but recent activity data for Germany and France has been weak, with manufacturing PMIs well below 50. Germany’s auto sector is struggling in particular. By contrast, the same industrial confidence surveys in Spain have been more positive. Meanwhile, the big drivers of wider European profit growth – which is expected to jump from 2-3% this year to around 10% in 2025e – are pencilled in as Germany and France. Both are forecast to move from low single digits in 2024e to 10-13% next year. But Spanish EPS growth is set to fall. This apparent contradiction in the macro outlook and expected earnings growth implies scope for surprises. Past performance does not predict future returns. This information shouldn't be considered as a recommendation to buy or sell specific sector/stocks mentioned. Any views expressed were held at the time of preparation and are subject to change without notice. Source: HSBC Asset Management. Macrobond, Bloomberg, Datastream. Data as at 11.00am UK time 05 October 2024. Key Events and Data Releases Last week The week ahead Source: HSBC Asset Management. Data as at 11.00am UK time 05 October 2024. This information shouldn't be considered as a recommendation to buy or sell specific sector/stocks mentioned. Any views expressed were held at the time of preparation and are subject to change without notice. Market review Heightened geopolitical concerns weighed on risk markets, with oil prices climbing on rising supply worries. The US dollar DXY index was little changed. Core government bonds were mixed, with US Treasuries weakening on comments by Fed Chair Powell that there was no urgency to ease policy. Bunds rallied on dovish ECB comments. Global equities softened, with US stocks falling across the board, and the small-cap Russell 2000 faring worst. The Euro Stoxx 50 fell on growing concerns about the eurozone’s economic outlook, while Japan’s Nikkei 225 was little changed despite a weaker yen following comments by new LDP president Ishiba on monetary policy. In emerging markets, the Hang Seng rallied further, Korea’s tech-driven Kospi index weakened, and India’s Sensex index also lost ground in a holiday-shortened week. Copper and gold both consolidated following recent rallies. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-weekly/2024-10-07/

2024-10-04 07:05

Key takeaways US stocks and Treasuries fell on geopolitical concerns. European stocks and government bonds fell. Asian stocks were mixed but mostly lower; Japan gained. Markets US equities ended lower on Thursday, ahead of payrolls and unemployment reports due later today and as investors continued to monitor geopolitical developments in the Middle East. The S&P 500 fell 0.2%; energy shares rallied on higher oil prices. US Treasuries fell (yields rose) after upbeat ISM services data and as crude oil prices surged on Middle East supply risks. 10-year yields rose 7bp to 3.85%. European stock markets mostly fell on Thursday amid rising geopolitical tensions. The Euro Stoxx 50 fell 0.8%. The German DAX lost 0.8%, while the French CAC dropped 1.3%. In the UK, the more defensive FTSE-100 edged 0.1% lower. European government bonds fell (yields rose), as investors weighed the ECB policy outlook. 10-year German yields rose 5bp to 2.14% as 10-year French yields rose 8bp to 2.94%. In the UK, 10-year gilt yields were range-bound at 4.02%. Most Asian stock markets fell on Thursday as investors assessed geopolitical tensions in the Middle East. Hong Kong’s Hang Seng ended a volatile session 1.5% lower after recent stimulus-triggered rallies, while India’s Sensex dropped 2.1%. Bucking the regional trend, Japan’s Nikkei 225 rose 2.0%, led by exporter shares amid a weaker yen on the new prime minister’s comment that Japan is not ready for another rate hike. Onshore markets in China and Korea were closed for holidays Crude oil prices surged on Thursday amid mounting concerns about geopolitical tensions in the Middle East. WTI crude for November delivery jumped 5.1% to settle at USD73.7 a barrel. Key Data Releases and Events Releases yesterday US ISM Services Index rose more than expected to 54.9 in September, from 51.5 in August. Despite being relatively volatile lately, the reading had been trending lower since the start of 2024. Releases due today (4 October 2024) In the US, non-farm payrolls have trended lower recently, in line with other labour market indicators, such as job openings. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-daily/2024-10-04/

2024-10-03 07:04

Key takeaways US stocks were little changed and Treasuries fell. European stocks traded mixed, as government bonds fell. Asian stocks mostly fell; Hong Kong rallied. Markets US equities closed little changed on Wednesday, as investors continued to monitor geopolitical developments in the Middle East and awaited more key US jobs data due this week. The S&P 500 ended flat. US Treasuries fell (yields rose), aided by upbeat ADP employment data ahead of Friday’s highly anticipated unemployment and nonfarm payrolls reports. 10-year yields rose 5bp to 3.78%. European stock markets lacked clear direction on Wednesday. The Euro Stoxx 50 rose 0.2%. The German DAX fell 0.3% while the French CAC ended flat. In the UK, the FTSE-100 rose 0.2%, aided by higher energy stocks. European government bonds fell (yields rose), in a reversal of Tuesday’s risk-off rally. 10-year German yields rose 5bp to 2.09% as 10-year French yields rose 4bp to 2.86%. In the UK, 10-year gilt yields were up 8bp to 4.02%. Asian stock markets mostly declined on Wednesday amid rising concerns over geopolitical developments in the Middle East. Japan’s Nikkei 225 and Korea’s Kospi lost 2.2% and 1.2%, respectively. However, Hong Kong’s Hang Seng surged 6.2%, extending the recent stimulus-driven rallies and led by gains in tech heavyweights and real estate shares amid further easing of home-purchase restrictions in China’s top-tier cities. Onshore markets in China and India were closed for holidays. Crude oil prices extended gains on Wednesday, as ongoing concerns over supply risks in the Middle East overshadowed data showing a rise in US weekly crude and gasoline stockpiles. WTI crude for November delivery rose 0.4% to USD70.1 a barrel. Key Data Releases and Events Releases yesterday In South Korea, the manufacturing PMI fell to a 15-month low of 48.3 in September, from 51.9 in August. The output and new orders indices declined as overseas demand weakened. In Mexico, the manufacturing PMI remained in contractionary territory at 47.3 in September, down from 48.5 in August. This reflected weakness in new orders, production, and employment. Releases due today (3 October 2024) US ISM Services Index has been relatively volatile as of late but has trended lower since the start of 2024. The consensus forecast is for a modest rise in September’s reading. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-daily/2024-10-03/