Market Insights: May 10th, 2024

Stock Market Trends:

• The three major A-share indices had mixed performance at the opening, with the Shanghai Composite briefly up by 0.2%. It has rebounded over 20% from the low point on February 5th (2635.09 points), entering a technical bull market. However, gains have since diminished, now reporting at 3157.14 points, up 0.09%, with the Shenzhen Component Index down 0.33%, and the ChiNext Index down 0.63%.

Industry Performance:

• Non-ferrous metals led the gains, followed by conglomerates, real estate, petrochemicals, transportation, and textiles. Communications trailed, with automotive, agriculture, forestry, fisheries, electrical equipment, defense, and electronics showing weakness.

Energy Market:

• Crude oil continued its rise to a new high for the week. U.S. natural gas prices surged over 5% to a three-month high. Following unemployment data, gold accelerated its rebound, rising over 1% to reach a monthly high. Tin in London rebounded nearly 2%, approaching a week high, while copper settled unchanged, failing to surpass the $10,000 mark.

China Market:

• During the U.S. stock market hours, Chinese concept stocks made a strong rebound, with the index up 1.6%, ending a three-day decline. XPeng Motors rose over 3%, and NIO rose over 2%. The offshore yuan, which had fallen to a one-week low of 7.23, rebounded significantly. The three major A-share indices collectively rallied, with lithium battery stocks surging and Hong Kong-listed Chinese real estate stocks posting significant gains.

Commercial Policies:

• HSBC (00005) and Standard Chartered (02888) among other banks and large British companies are pressuring the UK government to relax proposed restrictions on doing business with China. These restrictions are part of the UK's new national security legislation, aimed at increasing transparency in transactions with countries that pose a potential security risk to the UK. Executives are lobbying British officials not to categorize China under the strictest risk category, arguing it would hinder business development and have negative repercussions.

Cryptocurrency Market:

• Bitcoin has fallen for five consecutive days, marking its longest period of decline since October last year. According to CoinGecko and compiled data, Bitcoin reached a record high of $73,798 in mid-March, but the entire cryptocurrency market plummeted 17% to $2.4 trillion thereafter.

Commodities Market:

• On Friday, WTI crude prices rose to a weekly high near $79.30. Optimism about Chinese demand and ongoing geopolitical tensions in the Middle East boosted WTI prices. The Fed's hawkish stance may limit the upside potential for crude oil prices denominated in dollars.

Foreign Exchange Market:

• The GBP/JPY held steady, oscillating above 194.50, as the Japanese yen continued to weaken across the board following the Bank of Japan's (BoJ) interventionist rhetoric. The Bank of England (BoE), as widely expected, kept interest rates unchanged, but the Monetary Policy Committee's vote shifted once again towards a rate cut.
• In early Asian trading on Friday, GBP/USD rose slightly to near 1.2525. Following the BoE's dovish stance, GBP/USD rebounded from the low of 1.2445. Focus shifts to the preliminary GDP for the first quarter in the UK and the U.S. Michigan Consumer Sentiment Index on Friday. Bank of England Governor Andrew Bailey mentioned in a press conference, "A rate cut next month is possible."

New Zealand Manufacturing:

• The April New Zealand Manufacturing Purchasing Managers' Index (PMI) published by BusinessNZ showed a rebound to 48.9, seasonally adjusted, from 46.8 in March, but still below February's 49.1. The New Zealand Manufacturing PMI has been in contraction for 14 consecutive months, indicating signs of improvement rather than a full-fledged weakness.