Daily Market Outlook, March 4, 2024

Munnelly’s Market Minute…

“China Sentiment Supported By Congress Hopes”

Asian Equities and European stock futures are on the rise, echoing last week's strong performance on Wall Street. Expectations of potential stimulus measures from Chinese authorities at the 14th National People’s Congress contribute to positive sentiment. The annual session of the National People’s Congress begins, focusing on government proposals to support the economy, including setting a potentially challenging growth target for 2024, possibly unchanged from 5% in 2023. Oil prices have surged following OPEC+'s decision to extend production cuts by about 2 million barrels a day until the end of June.

In global markets this week, attention will be focused on the US monthly jobs report on Friday and Fed Chair Powell’s semi-annual testimony to Congress on Wednesday and Thursday. Recent adjustments in financial markets indicate a reduction in US monetary policy easing expectations, with projections now suggesting three rate cuts in 2024. This shift reflects signs of resilient economic growth and easing inflation trends. Powell is expected to align with current market expectations without significantly altering them.

In the UK, Chancellor Hunt's Spring Budget on Wednesday represents a pivotal event before the general election. Despite increased fiscal headroom of around £25bn compared to £13bn estimated in November, limited scope for fiscal handouts may exist due to pressure to increase public spending. However, the Budget presents a crucial opportunity for the Conservatives to narrow the polling gap with Labour.

Today's data docket features the Eurozone Sentix investor confidence survey for March as the sole data release. ECB’s Holzmann and the Fed’s Harker are scheduled to deliver speeches. Overnight, the BRC UK retail sales monitor will offer insights into retail activity amid challenging weather conditions in February.

Overnight Newswire Updates of Note

OPEC+ Members Extend Production Cuts In Bid To Boost Oil Price
US Funding Bill Blocks China From Buying Oil From SPR
Hunt Announces UK Manufacturing Funding In Budget Growth Push
Japan Govt Mulls Declaring Official End To Deflation
Fund Managers Downplay RBA Risks To Pile On Aussie Short Bets
Economy Set To Lead Agenda For China’s Top Political Advisory Body
Japan Corporate Capital Spending Jumps 16.4% In Q4
Bitcoin Breaches $64,000 Briefly As ETF Demand Lures Traders
Japan’s Nikkei 225 Breaches Key 40,000 Level For First Time
BofA’s Subramanian Is Latest On Wall Street To Boost S&P 500 Target
Apple Cut From Goldman’s Conviction List As Shares Underperform

(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: 1.0865 (EU1.6b), 1.0800 (EU1.31b), 1.0850 (EU759m)
USD/JPY: 148.30 ($954.5m), 150.35 ($903.2m), 149.00 ($831m)
AUD/USD: 0.5855 (AUD780m), 0.6400 (AUD352.7m), 0.6370 (AUD300m)
USD/CAD: 1.3195 ($1.03b), 1.3310 ($706.8m), 1.3410 ($532m)
USD/CNY: 7.2500 ($758.4m), 7.4400 ($719.4m), 7.1000 ($302m)
GBP/USD: 1.1150 (GBP500m), 1.2500 (GBP406.8m)

CFTC Data As Of 20/02/24

Euro net long position is 62,854 contracts
Japanese yen net short position is -132,705 contracts
Swiss franc posts net short position of -11,981 contracts
British pound net long position is 46,358 contracts
Bitcoin net short position is -1,967 contracts
Equity fund managers cut S&P 500 CME net long position by 5,157 contracts to 942,123
Equity fund speculators increase S&P 500 CME net short position by 14,679 contracts to 434,512