[True Burn Finance] April 30 Market Morning Report: Japanese authorities suspected of intervening in the yen; China's April PMI data expected to decline.
"According to Dow Jones, Japanese authorities intervened in the foreign exchange market, supporting the yen which had suddenly plummeted. The yen fell 1.2% against the dollar in early Asian trading, breaking through 160 to hit a 34-year low before rebounding strongly. Traders said Japan would have to fight hard to stop the yen's decline."
Overnight Highlights
l U.S. stocks rose, with the S&P 500 breaking above 5,100 points, supported by a solid earnings season, and Tesla posting its biggest gain in more than three years. U.S. Treasury yields fell slightly from last week's highs, the dollar index fell to a two-week low, and the yen rose against other G-10 currencies amid speculation that Japanese authorities may have intervened to curb speculative selling. Gold prices were mixed. Oil prices fell by more than $1 as signs of progress toward a ceasefire between Israel and Hamas reduced the geopolitical risk premium on crude. $Hang Seng Index(00HSI.HK)
International News
l The U.S. Treasury Department raised its estimate of federal borrowing for the quarter to $243 billion, higher than most traders expected, largely reflecting lower-than-expected cash receipts.
l JPMorgan's chief market strategist said U.S. stocks could repeat the late-summer slump that began in August last year, with the prospect of prolonged high interest rates putting pressure on economic growth and posing risks to this year's stock market rally.
l Data from Goldman Sachs' prime brokerage unit showed net buying of tech stocks last week hit its highest level since December 2022, driven by increased long positions and short covering. UBS believes that AI concept stocks have driven the market rally this year, and the momentum around AI remains strong and could continue to support the stock market.
l German inflation accelerated for the first time since December last year, underscoring the European Central Bank's warning that the path to bringing inflation back to its 2% target would be bumpy.
l European Central Bank Vice President Luis de Guindos said the ECB faces significant risks in achieving its inflation target. Governing Council members Knot and Wunsch both said caution was needed regarding a second consecutive rate cut in July.
l According to Dow Jones, Japanese authorities intervened in the foreign exchange market, supporting the yen which had suddenly plummeted. The yen fell 1.2% against the dollar in early Asian trading, breaking through 160 to hit a 34-year low before rebounding strongly. Traders said Japan would have to fight hard to stop the yen's decline.
l Japan's top currency official, Masato Kanda, said the current developments in the foreign exchange market were "speculative, rapid, and abnormal" and could not be ignored. When asked if Japan was ready to take action in the foreign exchange market, Kanda said they were always ready to respond.
l $Apple(AAPL.US) 's iPad has been added to the list of big tech products and services targeted by the EU's strict new rules aimed at preventing potential anti-competitive abuses. This means Apple has six months to ensure its tablet ecosystem complies with a series of priority measures under the EU's flagship Digital Markets Act (DMA).
l A report from the California New Car Dealers Association showed that $Tesla(TSLA.US) 's car sales in California fell for the second consecutive quarter, suggesting the company's popularity in the state may have peaked.
Greater China News
l According to China's Ministry of Foreign Affairs, President Xi Jinping will pay state visits to France, Serbia, and Hungary from May 5 to 10. EU spokesman Eric Mamer posted on X that European Commission President Ursula von der Leyen will travel to Paris on May 6 for a trilateral meeting with French President Emmanuel Macron and Chinese President Xi Jinping.
l China's Ministry of Finance announced the 14th extension of the exclusion list for additional tariffs on U.S. goods, extending the exclusion period for relevant goods from May 1 to November 30, 2024, without imposing additional tariffs in response to U.S. Section 301 measures.
l $CHINA VANKE(02202.HK) reported a net loss of 362 million yuan in the first quarter, narrowing from a loss of 1.46 billion yuan in the fourth quarter of last year. The company had posted a profit of 1.45 billion yuan in the same period last year.
Commodity and Forex Markets
l Momentum is building toward a ceasefire agreement between Israel and Hamas, with U.S. Secretary of State Antony Blinken saying he would step up efforts to achieve a ceasefire during his visit to the Middle East. However, the two nearest Brent contracts still show a backwardation structure, with a spread of more than $1 per barrel, a bullish signal indicating tight near-term supply.
Earnings and Economic Data Focus
l China April official manufacturing PMI (expected: 50.4, previous: 50.8)
l China April Caixin manufacturing PMI (expected: 51, previous: 51.1)
l Eurozone Q1 GDP annualized preliminary (expected: 0.20%, previous: 0.10%)
l Eurozone April CPI monthly (expected: 0.60%, previous: 0.80%)
l U.S. April Conference Board Consumer Confidence Index (expected: 104, previous: 104.7)
Source: Goldhorse Capital Extramile
Author: Terry Chow
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