24.11.2023
US Wrap… (closed) ESA: +0.05%
US equity index futures traded little changed on Thursday, with cash markets closed for the Thanksgiving holiday. An 8.7% surge in November has set the S&P 500 on course for its best month since July last year. The seven largest stocks now account for more than 27% of the index, with their gains driving the benchmark to technically overbought levels.
Asia Morning… HSI -1.38%, NKY +0.64%, SHCOMP -0.48%, ASX +0.23% KOSPI -0.58%
Asia stocks fell, with Chinese equities leading declines as Beijing’s new measures to support the property sector failed to lift sentiment. The China stimulus boost is fading away again quickly, reiterating the need for structural reforms rather than short-term measures. The MSCI Asia Pacific Index dropped as much as 0.2%, weighed down by Tencent and TSMC. The gauge remains on course for a second weekly advance after tech stocks drove a rally earlier this week. China Construction Bank and other Chinese financial stocks listed in Hong Kong fell. Chinese banks providing unsecured loans to qualified developers “would be a risky move,” according to analysts.
Commodity action… Gold is on track to notch a second weekly gain, supported by a weaker US dollar as markets continued to price in expectations for looser monetary policy in the world’s biggest economy next year. Oil held a decline after the OPEC+ alliance was forced to delay a critical meeting amid a dispute over output quotas, casting a pall of uncertainty over the group’s production policy for next year.
Market events:
- Macro-economic Data: US S&P Global Manufacturing, Services, and Composite PMI. Eurozone HCOB Manufacturing and Services PMI.
FX Technical Strategy: Overbought USD
EURUSD and GBPUSD have lost some momentum WTD, and have traded in a narrow range. However, they are holding above their 200-day moving average near 1.0808 and 1.2454, respectively to keep us looking for a topside break to target 1.1000 in EURUSD before year end and 1.1500 in H1 24. In EM FX, both USDBRL and USDMXN have traded sideways this week, but while they are holding firmly below their 200-day moving average at 4.98 and 17.60, respectively, these pairs could head lower into Q1 24. Against this back drop, we note that the ZAR has been an underperformer. USDZAR pushed above its 200-day moving average (near 18.63) on Wednesday and is approaching the high of the 4-week trading range of 18.11-18.95, derailing our call for a lower USD. That said, we note that daily momentum has reached overbought conditions for the USD, and given resistance near 19.30 we would be looking for topping signals near the 19-19.30 area. A drop back below the 200-day moving average would help our case that the 18 level could be breached to reach 17.60 in Q1 24.
Top Headlines:
US Rate cycle, cheapest investment funds