Bloomberg Daybreak: Asia 23/05/2024

Summary

Daybreak covers key global market events, including anticipation around Nvidia's results, strong Singapore GDP numbers, and mixed Asian market openings. The discussion highlights central banks' 'higher for longer' policies, U.S. Fed minutes, and the impact of Nvidia's financial performance on the tech sector. Analysts from Goldman Sachs and Sigmoid Capital share insights on Japan's equity market potential and challenges in China's manufacturing sector. The Bank of Korea's steady rate decision and SingTel's future plans amid macroeconomic pressures are also featured.

Takeaways

• 📈 Markets are excited about the start of trading, with strong video numbers driving market sentiment.
• 📊 Global central banks' policies and their impact on the economy remain a primary focus, with higher interest rates being a common theme.
• 🇸🇬 Singapore's GDP numbers for 2024 are better than expected, indicating economic resilience.
• 🇰🇷 Japan, Korea, and Australia show mixed market performances as trading begins, with a strong focus on tech stocks.
• 🧠 Nvidia's strong financial performance, including a forecast for significant revenue growth and a stock split, is a major market driver.
• 🏦 Central banks in New Zealand, Korea, and the US emphasize 'higher for longer' interest rates to control inflation.
• 📈 Indonesia is seen as oversold, with potential for market recovery due to strong fundamentals in the banking sector.
• 🇯🇵 Japan is considered an underappreciated turnaround story, with strong corporate governance reforms and potential for continued equity market growth.
• 🔧 Chinese manufacturing faces potential overcapacity issues, impacting global supply chains and credit growth.
• 📉 The Bank of Korea keeps its key rate steady at 3.5%, with an upgraded GDP forecast, reflecting cautious optimism amid global financial pressures.

Q & A

What is the general sentiment around the start of markets in the transcript?

The general sentiment is excitement, largely due to the impressive video numbers that have been a significant focus and relief for the market, particularly validating the bullish stance.

What is the significance of the video numbers mentioned in the transcript?

The video numbers refer to the strong financial results from Nvidia, a major player in the chip and AI industry. These numbers are significant as they have exceeded expectations and are driving market sentiment and momentum trades in the technology sector.

What central banks are being discussed in the transcript and why are they important?

The transcript discusses the Federal Reserve (The Fed), the Reserve Bank of New Zealand, and the Bank of Korea. They are important because their monetary policies and statements have a direct impact on global financial markets, influencing interest rates, currencies, and investor behavior.

What was the unexpected outcome from Singapore's GDP numbers?

Singapore's GDP numbers for the first quarter were better than expected. The growth estimate for 2024 was maintained between 1 and 3%, with the final first quarter GDP rising by 2.7%, slightly higher than the expected 2.5%.

How did the transcript describe the market's reaction to Nvidia's financial results?

The market reacted positively to Nvidia's financial results, with the company's shares rising about 6% in after-hours trading. Nvidia reported strong sales and a very bullish outlook, which contributed to the positive market sentiment.

What is the current situation with BHP's takeover offer for Anglo American?

BHP has an extended deadline to convince Anglo American of its takeover proposal. While the two companies are reportedly getting closer on price, the structure of the deal, particularly concerning BHP's South African plan, remains a sticking point.

What is the significance of the manufacturing PMI in Japan?

The manufacturing PMI in Japan has expanded above the 50 mark for the first time since May 2023, indicating an expansion in the manufacturing sector after a period of contraction.

What is the current stance of the Bank of Korea regarding interest rates?

The Bank of Korea has decided to keep its key interest rate steady at 3.5%, a decision predicted by all economists surveyed. This marks the 11th consecutive month of maintaining the rate at a level seen as restrictive.

What is the impact of the strong Singapore dollar on SingTel's business?

The strong Singapore dollar is putting pressure on SingTel's business, as over 70% of their operations are outside of Singapore. The strong currency has led to losses due to the translation effects on their foreign businesses.

What are the insights shared by Wendy Chen, CEO of Sigmoid Capital, on the Japanese market?

Wendy Chen believes that Japan is currently the most underappreciated opportunity in global equities. She cites Japan's exit from deflation, a healthy wage increase, and corporate governance reforms as factors that could lead to a rerating and further upside for Japanese equities.