Inflationary pressures are rising in Singapore and Malaysia. Japan’s currency policymakers are again talking about intervention :: InvestMacro

By JustMarkets

At Friday’s stock market close, the Dow Jones Index (US30) was down 0.77% (for the week +1.67%). The S&P 500 Index (US500) decreased by 0.14% (for the week +1.54%). The NASDAQ Technology Index (US100) closed positive 0.16% (for the week +1.70%).

Lululemon Athletica shares closed down more than 15% on Friday after warning of a slowdown in US store visits and forecasting 2025 net revenue below consensus. Nike (NKE) also closed down more than 6% after warning of low single-digit sales declines in the first half of the fiscal year. Additionally, Tesla’s shares (TSLA) fell more than 1% after Bloomberg reported that the company cut vehicle production at a plant in China. FedEx (FDX) shares are up more than 7% after the company reported third-quarter adjusted earnings per share above consensus and announced a $5 billion share repurchase plan. Additionally, shares of Nvidia (NVSA) are up more than 3% after UBS raised its price target on the company’s stock to $1,100 from $800.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) rose by 0.15% (for the week +1.50%), France’s CAC 40 (FR40) fell by 0.34% on Friday (for the week -0.29%), Spain’s IBEX 35 (ES35) added 0.70% (for the week +3.27%), and the UK’s FTSE 100 (UK100) closed positive 0.61% (for the week +2.63%).

The IFO German business climate survey for March rose by 2.1 to a 9-month high of 87.8, stronger than expectations of 86.0. Nagel, a spokesman for the ECB’s governing council and president of the Bundesbank, said the likelihood that the ECB would cut interest rates for the first time “before the summer break” in August is growing. Still, investors should not conclude that the same will happen at every subsequent meeting.

On Friday, silver prices were pressured by the negative impact of copper prices falling to 1-week lows amid signs of weakness in Chinese industrial metals demand, as demand for metals during the peak of China’s construction season falls short of expectations.

Asian markets traded flat yesterday. Japanese Nikkei 225 (JP225) gained 6.07%, Chinese FTSE China A50 (CHA50) added 0.05% in 5 trading days, Hong Kong Hang Seng (HK50) lost 1.14% last week, and Australian ASX 200 (AU200) closed positive for the week 1.31%. Japan’s Nikkei 225 Index (JP225) opened lower on Monday as investors booked profits after the benchmark recently hit record highs. A senior Japanese finance official expressed doubts about the US dollar’s recent appreciation against the Japanese yen, fueling speculation of possible market intervention. The yen fell sharply last week even after the Bank of Japan (BoJ) raised interest rates for the first time in 17 years and ended eight years of negative rates in what was seen by markets as a well-crafted decision. The central bank also abandoned its yield curve adjustment policy, stopped buying ETFs and J-REITs, and reduced bond purchases. Meanwhile, BoJ Governor Kazuo Ueda said the central bank will maintain an accommodative stance for some time, keeping rates at 0%.

Chinese stocks have been rising since the market opened on Monday. Chinese Premier Li Keqiang said on Sunday that Beijing will step up policy measures to support the economic recovery. He also cited China’s relatively low consumer prices and the central government’s manageable debt levels as opportunities to expand macroeconomic policies.

The historic end of ultra-easy monetary policy in Japan and a surprise rate hike in Taiwan have boosted the yuan’s appeal as a funding currency for global trading of emerging market currencies. The yuan has become a more affordable funding option as the People’s Bank of China (PBoC) is in easing mode. While the yen remains the lowest-yielding currency in the world despite the Bank of Japan’s rejection of negative rates, heightened expectations of its rise and volatility could deter borrowers. The Chinese yuan currently compares more favorably to the Taiwan dollar on these metrics and is more attractive than the US dollar in terms of both implied yield and volatility.

Singapore’s annual inflation rate for February 2024 rose to 3.4% from a more than two-year low of 2.9% in the previous month, compared with market forecasts of 3.3%, mainly due to faster growth in housing and food prices. Core inflation rose to a seven-month high of 3.6% in February from January’s 23-month low of 3.1%, beating forecasts for a 3.4% increase. On a month-on-month basis, consumer prices rose by 1.0% in February, the highest in 15 months. The Ministry of Commerce and the Monetary Authority of Singapore (MAS) predict core and core inflation to average between 2.5% and 3.5% in 2024.

Malaysia’s annual inflation rate unexpectedly rose to 1.8% in February 2024 from 1.5% in the previous month, beating market predictions of 1.4%. This was the highest rate since October last year. Core consumer prices, excluding volatile fresh food prices and administrative costs, rose to 1.8% y/y, in line with the pace of growth in January.

S&P 500 (US500) 5,234.18 −7.35 (−0.14%)

Dow Jones (US30) 39,475.90 −305.47 (−0.77%)

DAX (DE40) 18,205.94 +26.69 (+0.15%)

FTSE 100 (UK100) 7,930.92 +48.37 (+0.61%)

USD Index 104.43 +1.00 (+0.96%)

Important events today:

• – Japan Monetary Policy Meeting Minutes at 01:50 (GMT+2);
• – Singapore Consumer Price Index (m/m) at 07:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 12:00 (GMT+2).
• – US FOMC Member Bostic Speaks at 14:25 (GMT+2);
• – US New Home Sales (m/m) at 16:00 (GMT+2);
• – US FOMC Member Cook Speaks at 17:20 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.