ASIA STOCKS: Asian Equities Mostly Lower, Outflows In EM Asia Continue
Jan-17 04:36
- South Korea's Kospi declined 0.2% as investors balanced optimism over returning foreign funds with lingering political uncertainty, South Korea equities are the only market in Asia to report net inflows this year. A Bloomberg Fear/Greed indicator suggests a shift toward bullish sentiment, with the Kospi up 5% year-to-date after six months of declines, however there index is tied closely to the performance of Samsung which is down 40% from August 2024 highs.
- Taiwan's Taiex is up 0.20% today and has outperformed the MSCI Asia Pacific Index over the past few days, driven by TSMC’s strong earnings report, which exceeded forecasts for 2025 sales and capital expenditure. TSMC benefits from the AI spending boom despite uncertainties from the US-China tech conflict. Momentum is somewhat tied to Nvidia with the company's upcoming earnings in six weeks to be very closely watched, as any disappointment could ripple through the global tech sector, impacting sentiment. TSMC's US shares rose 3.9% on Thursday and trade flat today.
- Japanese equities have struggled today with the Topix falling 1.2% as expectations of a BoJ rate hike strengthened the yen, hitting exporters and chip stocks, the index has since recovered somewhat to trade down 0.70%, while the Nikkei is 0.70% lower. Nintendo dropped 7.2% after announcing a delayed release of its Switch 2 console, disappointing investors. Investors look to be positioning ahead of major events, including the BOJ meeting and US presidential inauguration which has added to the cautious tone.
- Australia's ASX 200 is 0.25% lower with mixed performance in the commodities sector. Rio Tinto declined following reports of early-stage merger talks with Glencore. Broader market sentiment reflected a lack of catalysts despite steady bond yields. New Zealand's NZX 50 closed 1% higher.
- Elsewhere across EM Asia, foreign investors have continued selling local equities, in particular Indian equities with that market seeing $4b of outflows so far this year, the Nifty 50 is 0.50% lower today and down 2% for Jan. Malaysia & Philippines have also seen heavy outflows with the Malay KLCI down 3.55% over the past week, while Philippines PSEi is 4.30% lower to be the worst performing market over the past week.
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GOLD: Steady Ahead Of FOMC Decision
Dec-18 04:29
Gold is slightly weaker ahead of the Federal Reserve’s upcoming rate decision, with traders watching for clues about next year’s monetary policy path. Gold is 0.1% lower in today’s Asia-Pac session , after closing 0.2% lower at $2646.83 on Tuesday.
- While markets widely expect officials to announce another quarter-point cut, what will happen in 2025 isn’t clear as policies by the incoming Donald Trump administration may hinder further easing. Lower rates are typically positive for gold, which doesn’t pay interest.
- There are varying opinions on the path of rates ahead and the number of cuts that the Fed will signal in its Dot Plot for 2025. We go through what to watch for in detail in our MNI Fed Preview here.
- The precious metal has risen by more than 28% this year, putting it on track for its biggest annual gain since 2010. Its strength has been supported by monetary easing in the US, safe-haven demand and sustained buying by the world’s central banks.
JGBS: Little Changed, FOMC Tonight, BoJ Policy Decision Tomorrow
Dec-18 04:06
JGB futures are stronger, +10 compared to settlement levels.
- Outside of the previously outlined trade balance data, there hasn't been much by way of domestic drivers to flag.
- The focus remains on tomorrow’s BoJ policy decision, with the broad consensus expecting no change to policy settings.
- Towards late November, market pricing for the meeting outcome stood at over 60% in terms of a 25bps hike priced in. This has fallen back sharply though as we have gotten closer to the meeting date, last around 14% probability priced for a full rate hike.
- In terms of what has shifted sentiment around the likely meeting outcome, it has more reflected press articles, along with BoJ commentary, as opposed to shifts in data outcomes. (See MNI BoJ Preview here)
- Cash US tsys are ~1bp richer in today’s Asia-Pac session ahead of today's FOMC policy decision.
- Cash JGBs are slightly richer across benchmarks. The benchmark 10-year yield is 0.1bp lower at 1.083% versus the cycle high of 1.108%.
- The swaps curve has twist-steepened, pivoting at the 20-year, with rates 1bp lower to 3bps higher.
- Tomorrow, the local calendar will also see Weekly International Flow and Tokyo Condominiums For Sale data.
EQUITIES: S&P 500 Growth Stocks Continue To Outperform Value Stocks
Dec-18 03:56
- The S&P 500 Growth Index, up 40.50% y/y continues to outperform the Value Index, up 14.95% y/y. Growth has now outperformed by 25.5% over the past year, reaching the largest gap overnight.
- The S&P 500 has returned 26.85% for the year, while the NASDAQ is 30.76% for the year.
Chart. S&P 500 Growth vs Value
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Dec-05 15:48
