EQUITIES: Equities Higher During APAC Trading Helped By Rate Cut Optimism
Equity markets have generally followed the US higher in APAC trading today driven by optimism that the start of the Fed’s easing cycle is not too far away. The S&P and Nasdaq e-minis are unchanged in thin trading. The MSCI APEX 50 is up 1.7%.
- Japan’s Nikkei is 1.2% higher and the Topix +1.1%. While Korea’s KOSPI is +0.1% (held back by the finance sector), the KOSDAQ is +1.1%. Taiwan’s TAIEX is up 0.6%.
- HK’s Hang Seng is up 1.5% with the tech index rallying 2.3%. China’s CSI 300 has underperformed rising only 0.4% (property +0.3%). China signalled that it may ease restrictions on gaming and that it would create an “initial comprehensive computing power infrastructure system” by end-2025, according to Bloomberg.
- Australia’s ASX 200 is up 0.9% but down off the intraday high. The NZX 50 did not do as well rising 0.4%.
- ASEAN is mixed with Indonesia’s Jakarta comp up 0.6%, Singapore’s Straits Times +0.4%, the Malay KLCI +0.2% but the SE Thai flat and the Philippines PSEi down 0.5%.
- India’s Nifty 50 is 0.5% stronger.
- There is little on the upcoming US calendar with only the Richmond and Dallas Fed indices for December later.
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US TSYS: Marginally Cheaper, Ranges Narrow In Asia
TYZ3 deals at 108-08+, -0-03, a 0-07+ range has been observed on volume of ~195k.
- Cash tsys sit 2-3bps cheaper across the major benchmarks, the belly is marginally leading the cheaps.
- Tsys ticked lower in early trade, there was no overt macro driver as perhaps the possibility of an extended truce between Hamas and Israel weighed.
- Support was seen as WTI ticked away from session highs and tsys recovered to hold cheaper dealing in a narrow range for the most part. WTI sits ~1% lower.
- There is a thin docket in Europe today, further out we have New Home Sales, Dallas Fed Mfg Activity and latest 2- and 5-Year supply.
EQUITIES: Sentiment Softens, China Property Losses Weigh
Regional equity sentiment has generally deteriorated as Monday's Asia session has progressed. Hong Kong and China related bourses have been the weakest performers, further unwinding some of the recent gains seen. US equity futures are mostly lower. Eminis sit near session lows, off around 0.30%, last at 4555. Nasdaq futures are down more, off 0.45%. US yields are higher across the curve, ahead of key US data this week, including PCE figures. This may be tempering US futures sentiment at the margin.
- For China/HK stocks renewed weakness in property stocks is evident. The CSI 300 real estate index is off 3.0% at the break, the headline CSI 300 is down 1.2%, and back sub 3500 in index terms. For HK, the HSI is down nearly 1% at the break.
- Earlier we had headlines from the PBoC pledging financial support for the private sector. The central bank stated it will encourage banks not to cut loans for private companies that are facing temporary difficulties. This may be weighing on broader sentiment, with the financials index down 1.63%.
- China industrial profits were +2.7% y/y in Oct, positive but well off recent highs (17.2% in August). China President XI is scheduled to visit Shanghai tomorrow, including the futures exchange.
- Elsewhere, Japan markets are off 0.35% for the Topix, -0.50% for the Nikkei. The yen is firmer, +0.35% and back sub 149.00, which may be weighing.
- The Kospi is -0.15%, unwinding earlier gains. The Taiex is down nearly 0.50%.
- In SEA, most markets are weaker, but the JCI in Indonesia and the Philippines bourse are higher.
BONDS: Tick Lower Through Monday's Session
NZGBs have ticked lower through Monday's session however ranges remained narrow in the space, and sit 1-3 bps cheaper across the major benchmarks. Light bear steepening has been observed.
- Pressure was seen on the space as regional equities ticked lower alongside US equity futures and the USD firmed as the PBoC vowed to boost bond issuance by private firms, and also support M&A's, IPOs of private sector firms.
- 10 Year NZ US swaps spreads remain stable and sit at +52bps.
- With Wednesday's RBNZ meeting in view OIS price no change in the OCR with ~40bps of cuts by October 2024.
- PM Luxon noted that he is concerned at the risk of recent fiscal deterioration.
- Looking ahead, the data docket is empty tomorrow. The aforementioned RBNZ meeting is the next event of note in NZ.
