ASIA STOCKS: Asian Equities Mixed As Japanese Equities Struggle
Asian markets traded mixed on Tuesday as global economic concerns and US policy developments influenced sentiment. Japan's Nikkei fell 1.5%, marking a fourth day of losses, with chip-related stocks like Advantest and Lasertec sliding after new US export restrictions on semiconductors. Chinese and Hong Kong equities led regional gains, buoyed by optimism over gradual US tariff rollouts and potential policy support for China's economy. The Australian market advanced, supported by energy stocks as oil prices hovered near a five-month high, South Korean shares initially dipped however the KOSPI now trades 0.40% higher while Taiwan’s Taiex rose 0.9%, driven by gains in semiconductor stocks, including a 1% jump from TSMC.
- US Economic Data has been a main contributor of softer equity prices following stronger-than-expected US jobs data increased expectations that the Federal Reserve will delay rate cuts, weighing on growth stocks across the region, with the market now closly watching tonight PPI numbers.
- There is growing optimism Over Gradual US Tariff Rollouts after reports that the incoming US administration considering a measured increase in tariffs this provided a boost to Chinese and Hong Kong equities, easing inflation and growth concerns.
- Oil Prices and Energy Stocks have benefitted from oil prices hovering near a five-month high following tougher US sanctions on Russian oil producers.
- India’s Nifty 50 is nearing oversold territory, with its 14-day RSI approaching 30, a level that has previously signaled potential reversals but can persist below it for extended periods. The broader selloff, driven by rising oil prices and a weak rupee, has also pushed the Nifty Smallcap 250 index to its most oversold level since June 2022, marking its worst day since August.
- US Equity futures are edging higher throughout the session, with Dow eminis +0.15%, S&P 500 eminis +0.30% and NASDAQ 100 eminis +0.46%
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MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
