13 November 2023
Dear clients,
Shares of chip manufacturers gave Asian stock investors some energy at the beginning of the week, picking up where Wall Street left off, while US bond yields remained at low levels, which also kept the dollar in check.
Otherwise, however, the bears were firmly in control.
Much here can probably be attributed to China rather than the downgrade of the US sovereign debt rating outlook by Moody's, which investors took calmly.
The Chinese consumer has so far refused to come to the rescue of the world's second-largest economy. Monthly retail sales data are due on Wednesday, but the weekend's Singles' Day shopping extravaganza - analogous to Black Friday in other countries - showed only marginal gains.
As for the region, Japan's tech-focused Nikkei index managed to keep its head above water thanks to gains in the two largest chip-related stocks; Taiwan's benchmark rose 0.8%.
Hong Kong, meanwhile, lost about 0.15% after early gains. A sub-index of technology stocks maintained positive momentum, but another index of mainland property developer stocks fell more than 1%.
China's blue chips fell 0.5%.
U.S. retail sales data are also due out on Wednesday, followed by the Consumer Price Index a day earlier. These data could provide key assistance to the Federal Reserve in determining the path forward for interest rates, including the need for another hike.
The Fed's rhetoric has become hawkish of late, but markets are still more focused on the data, especially the soft non-farm employment numbers earlier this month.
ECB President Christine Lagarde said last week that rates will remain restrictive for at least a few quarters. Lagarde's deputy, Luis de Guindos will have his say a little later today, delivering the keynote address at the opening of Eurofinance Week.
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