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Daily Insights

Focus of the Day
  • Market expectations of an earlier BoJ rate hike strengthened JPY, breaking below 150

Other Commentaries

  • US 10-year Treasury yield fell for two days as Treasury Secretary said increasing longer-term debt issuances would take time; China’s February loan prime rates held steady, stabilizing mainland bank net interest margins; strong Aussie jobs data boosted AUD

Market Analysis

FX Markets Analysis

Latest Technical Highlights

JPY - Uptrend ↗

Support / Resistance

vs HKD 5.08 / 5.25

vs USD 148 / 153

Bank of Japan Ueda said after a regular meeting with Prime Minister Shigeru Ishiba that the two did not discuss long-term interest rate changes. The market believes that the Japanese government seems to have given the green light to the Bank of Japan to raise interest rates. Technically, USD/JPY fell below the 150 mark, and the next support is at 148.

Legends

Uptrend ↗  Sideways →  Downtrend ↘

Pertaining to historical trend technical analysis only and do not reflect any forecasts.

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Stock Markets View

  • The delay in implementing reciprocal tariffs has provided temporary relief; however, recent inflation data has tempered market expectations for rate cuts. US equities remain range-bound at high levels. Tariffs and inflation expectations will likely continue to shape market performance
  • Optimism around international efforts to broker a ceasefire in the Russia-Ukraine conflict has buoyed European equities. However, lingering concerns over economic and political stability in the region may limit upside potential 
  • Investor optimism surrounding advancements in AI technology in China is driving a potential re-rating of Chinese equities, with funds flowing into Asian markets, particularly the relatively undervalued Hong Kong market
  • Emerging markets are showing overall improvement. However, caution is warranted as multiple Latin American countries continue to face challenges such as inflation, economic slowdown, and persistent currency depreciation, which could lead to renewed capital outflows and market volatility
  • The US postponement of reciprocal tariffs, coupled with mainland China’s AI-driven momentum in the tech sector and stronger-than-expected January credit growth, is set to support Hong Kong equities
Legends

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

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Bond Markets View

  • Concerns over a weakening US economy led to a slight weekly decline in US Treasury yields, stabilizing sovereign bond performance. Markets are focused on the Fed’s latest FOMC meeting minutes
  • Rising trade tensions have heightened economic uncertainty in the Eurozone, boosting expectations for further ECB rate cuts, which are supportive of Eurozone corporate bonds
  • Stronger-than-expected new loan growth in China reflects the effectiveness of economic stimulus measures, driving increased market financing demand. Asian investment-grade bond spreads continue to tighten
  • Higher yields remain a draw for investors, supporting historically tight credit spreads in the US high-yield bond market
  • Reports suggest the Chinese government is assisting a major property developer in addressing short-term funding gaps, stabilizing the real estate market and benefitting the overall performance of Chinese property bonds
  • Emerging market bonds are benefiting from a softer US dollar. However, new US tariffs have pressured Mexico’s economy, requiring appropriate monetary policies to balance risks of economic downside and currency depreciation
Legends

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

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