EQUITIES: Lower Yields Push Asia Equities Higher
Feb-06 2024 05:48
Regional Asia Equities are higher today, as yields move lower. Hong Kong and China Mainland equity strength help drive positive sentiment in the region, while investors brush off concerns surrounding contagion fears stemming from NYCM Commercial Property issues.
- Japan equities indices are mixed today. Tech names are weighing on the market however after Snap reported poor earnings and plunged 20% late in US trading, with the tech heavy Nikkei trading -0.10%, the Topix is faring better up 0.40% led by transportation names. In other news, Toyota's market value breaks ¥50 trillion for the first time.
- Australia Equities are higher today, after falling for the past two days. Lower US yields are supporting the move higher so far, as the market brushed of the hawkish rate talk from the RBA yesterday. Financials and Mining names are leading the move higher, while the potential merger between Woodside and Santos have ended causing Santos equity to fall over 6%.
- South Korea stocks are higher today, snapping a two-day losing streak. Data out earlier showed SK Dec Current account surplus widen to $7.415B, currently the Kospi is trading 1.30% higher.
- Elsewhere in SEA, it has been a strong start to trading with most markets trading 0.25-1.00% higher.
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USDCAD TECHS: Corrective Rally Falters
Jan-05 2024 21:00
- RES 4: 1.3482 200-dma
- RES 3: 1.3469 50-day EMA
- RES 2: 1.3409 1.0% 10-dma envelope
- RES 1: 1.3399 High Jan 05
- PRICE: 1.3327 @ 16:08 GMT Jan 05
- SUP 1: 1.3177 Low Dec 27
- SUP 2: 1.3093 Low Jul 14 and key support
- SUP 3: 1.3002 2.0% 10-dma envelope
- SUP 4: 1.2992 50.0% retracement of the 2021 - 2022 bull phase
The broader USDCAD trend outlook remains bearish, and with the Friday rally sold, focus could again turn lower. The 50-day EMA resistance above at 1.3469 has held, keeping the over-arching downtrend intact. The pair last week cleared a bear trigger at 1.3480, the Dec 4 low. Furthermore, all key short-term retracement points have been breached. On any return lower, sights are on 1.3093, the Jul 14 low and a key support.
US TSYS: Markets Roundup: Tsys Weaker After Noisy Dec NFP, Weak ISM Discounted
Jan-05 2024 20:53
- Treasury futures holding weaker after the bell, near the middle of a wide session range following this mornings headline NFP data. Mar'24 10Y futures -11 at 111-20.5 vs. 111-06.5 low; curves steeper: 3M10Y +6.503 at -133.760, 2Y10Y +4.017 at -34.770.
- Deemed "noisy", the higher than expected jobs gain was tempered by down revisions for the two prior releases (Dec jobs gain of 216k vs. 175k est, prior down-revised to 173k from 199k).
- Coupled with lower than expected ISM services data (50.6 vs. 52.5 est), ISM Services Employment (43.3 vs. 51.0 est) and Services New Orders (52.8 vs. 56.1 est) underlying rates gapped higher (10Y yield fell to 3.9513% low from 4.0971% high). Support gradually evaporated through midday with underlying futures holding weaker into the close with 10Y yield at 4.0476% (+.0489%).
- The vast U.S. services sector is set to sustain modest growth in coming months despite a surprisingly poor end to last year, with possible Federal Reserve rate cuts helping to stimulate demand later in the year, Institute for Supply Management chair Anthony Nieves told MNI Friday.
- Traders tentative as they await next week's CPI and PPI inflation measures on Thursday and Friday respectively.
CANADA: Analysts On Dec Labour Report [2/2]
Jan-05 2024 20:33
- GS: “Given softer activity data and continued progress on inflation (including in non-shelter core services) we continue to think that the BoC will deliver 25bps cuts at its April and June meeting, followed by quarterly cuts until reaching a terminal rate of 3.25% in 2025Q3.”
- RBC: “The BoC will still be cautious about pivoting to rate cuts too quickly - and wage growth is still running above the pace historically consistent with their 2% inflation target. But our own expectation is that the economic backdrop is soft enough for inflation to continue to move lower and that the BoC will start to push the overnight rate lower around mid-year this year.”
- TD: “It will be difficult for the BoC to draw any firm conclusions given the noisy tone of today's report, but we expect the Bank to view the sharp acceleration in LFS wages with a few grains of salt, given the large divergence against alternative measures of wage growth. [..] Our broader bias here is still for Canadian investors to be more sensitive to downside surprises than positive ones, as investors appear eager to embrace a more aggressive easing profile in Canada. With that in mind, 2s5s and 2s10s look too inverted.”
