Daily Market Outlook, March 26, 2024

Munnelly’s Macro Minute…

“Markets Mixed On Rates Outlook, Nikkei Pullback Persists”

On Tuesday, Asian stock markets are experiencing a mix of trading activity, influenced by the overall negative performance of Wall Street the previous day. Traders appear hesitant to make substantial moves as they await the release of important economic data, such as US inflation numbers on Friday. Most Asian markets ended lower on Monday. The US Fed has indicated a possibility of three rate cuts this year, while the European Central Bank and the Bank of England are also anticipated to lower interest rates in the near future. Continuing from the declines in the last trading day, the Japanese stock market is slightly down in volatile trading on Tuesday. The Nikkei 225 has dropped below the 40.4K handle, influenced by the overall negative performance of Wall Street yesterday. The losses in index heavyweights and financial stocks are somewhat balanced out by gains in exporters and technology stocks.

Today's economic calendar lacks significant UK data, shifting the focus primarily to the United States. Monthly durable goods orders will offer insights into the factory sector's activity. Recent survey data has hinted at a potential leveling off in manufacturing activity, with the PMI index remaining above the 50 expansion threshold for the third consecutive month in March, albeit the ISM index still remains below 50. Durable goods orders, often seen as a leading indicator for the more cyclical segments of manufacturing, have predominantly indicated a continued decline in output. Much of this downturn can be attributed to the volatile transport sector, particularly Boeing orders. However, orders for other durable goods also saw declines in January and have slipped in three out of the last four months. A forecasted rise for February would signal a significant shift in activity. Market observers will closely monitor movements in US consumer confidence, which serve as indicators of future economic activity. Consumer confidence measures have exhibited volatility recently, with the Conference Board's indicator reaching its highest level since July last year in January but sharply declining in February. These fluctuations likely reflect uncertainty regarding the pace of inflation and interest rate adjustments. Some other indicators of consumer sentiment have suggested a decline in March, indicating a potential further decrease in the Conference Board's reading.

BREAKING HEADLINE - Key Bridge in Baltimore, Maryland collapses after being struck by a cargo ship. Reports of vehicles and construction workers on the bridge as it collapsed.

Overnight Newswire Updates of Note

PBoC Extends Yuan Support As It Boosts Fix By Most Since January
Australia’s Consumer Sentiment Drops As Rate-Cut Prospects Dim
China Seen Delivering More RRR Cuts This Year To Boost Economy
Japan's Suzuki Says No Steps Ruled Out On FX Moves
Weak Yen Bets Seen In Japanese Skipping Hedges On Overseas Deals
New Zealand Joins UK And US In Condemning China-Linked Hacks
Israel Cancels Visit To Washington After US Abstains On UN Cease-Fire
Treasury Yields Inch Higher As Investors Look To Key Data In Week Ahead
Oil Prices Buoyed By Tight Supply Bets; Gaza Ceasefire In Focus

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

EUR/USD: 1.0860 (EU2.26b), 1.0925 (EU1.86b), 1.0865 (EU1.57b)
USD/JPY: 151.25 ($652.3m), 151.00 ($528.9m), 147.50 ($380m)
AUD/USD: 0.6560 (AUD1.32b), 0.6545 (AUD1.24b), 0.6475 (AUD800m)
USD/BRL: 4.9500 ($570m), 4.7800 ($500m), 5.4725 ($360m)
USD/CNY: 7.1700 ($530m), 7.3000 ($357.6m)
GBP/USD: 1.2700 (GBP435m), 1.2690 (GBP425.5m)
NZD/USD: 0.6170 (NZD694.8m)
EUR/GBP: 0.8750 (EU377.1m)
USD/MXN: 16.85 ($499.1m), 17.10 ($434.6m)
USD/KRW: 1328.55 ($425m)

CFTC Data As Of 22/03/24

Bitcoin net short position is -2,096 contracts
Euro net long position is 48,342 contracts
Japanese Yen net short position is -116,012 contracts
Swiss Franc posts net short position of -20,500 contracts
British Pound net long position is 53,200 contracts
Equity fund speculators trim S&P 500 CME net short position by 57,268 contracts to 416,777
Equity fund managers raise S&P 500 CME net long position by 35.431 contracts to 949,421