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14 May 2024

Daily Navigator

Key highlights

Equities: US stocks traded mixed; ADRs and HSI surged

US equities traded mixed on Monday as investors await key inflation data due in the next 2 days. The S&P 500 traded flat and hovered around the 5,200 level, with the next resistance at 5,236. Technology-sector stocks led the Nasdaq Composite index higher by 0.3%. Meanwhile, Asia equities traded mixed on Monday. China equities dropped earlier in the session on weaker-than-expected PPI data released last week, but recovered partial losses afterwards as China’s plan to sell ultra-long special bonds lifted market sentiment. On the other hand, the Hang Seng index extended its 3rd consecutive day of gains and closed above key levels of 19,000, despite losses in the automobiles sector on reports of a potential hike in tariffs from the US on China EV exports. The Nasdaq Golden Dragon China Index also surged 3.7% overnight.  Hong Kong stocks are set for gains later.  Investors are eyeing the earnings reports from major technology stocks, including Tencent and Alibaba today.

Bonds/Macro: US govt. bond yields traded flat ahead of PPI data tonight

The New York Fed survey showed that inflation expectations climbed in both near and longer term. The 1-year expectations ticked higher to 3.3% in April from its previous reading of 3%. The 5-year outlook also rose to 2.8% (from 2.6% previously). This, coupled with the University of Michigan inflation expectations released late last week, added pressure on the Fed’s rate path. The US government bond yields were largely flat on Monday – the 10-year yield dipped by 1bp to 4.49%, while policy-sensitive 2-year yield closed at 4.86%. The PPI data due tonight will be in focus. While investors expect a slight uptick in the headline data y/y, the core reading which excludes food and energy prices is expected to moderate to 2.3% (from 2.4% previously). Fed Chair Powell is also scheduled to speak later today.

FX: USD traded lower despite hawkish Fed policymaker comments

The USD (DXY) index erased early losses to close slightly lower on hawkish comments from a Fed official. Fed Vice Chair Jefferson said that “it is appropriate to keep the policy rate in restrictive territory” until it is clear inflation is falling to the 2% target. He also added the healthy jobs market allows the Fed to clamp down on demand until inflation cools. These comments corroborate our short-term view that the USD is likely to climb higher with a delay in rate cuts to H2 amid sticky inflation and resilient growth. April’s US CPI data to be released on Wednesday is central to this view. JPY continued to weaken on Monday as investors stayed doubtful about the BoJ extending the policy normalisation process. The risk for USD/JPY remains tilted towards further upside in the short term, given a still strong USD and a patient BoJ.

Chart of the day

Hang Seng index closed above key levels of 19,000 on Monday

Source: Bloomberg, Standard Chartered

Yesterday’s market moves

Summary table

Technical charts

Source: Bloomberg, Standard Chartered

Technical charts (cont.)

Source: Bloomberg, Standard Chartered

Technical charts (cont.)

Source: Bloomberg, Standard Chartered
Our 12-month asset class views at a glance
Economic and market calendar
The next resistance for S&P 500 index is at 5,236

Technical indicators for key markets as of 13 May close

Fractal dimensions of gold is reverting back to the reversal threshold

Our proprietary market diversity indicators as of 13 May close

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