April 2024 Outlook: United States-Neutral | Europe-Neutral | Japan-Slightly Positive | China-Neutral | Asia-Neutral
Switzerland cut interest rates earlier than the United States. Japan ended its negative interest rate policy, and China and Hong Kong have seen slight signs of recovery. As a result, the Asian market continues to be observed cautiously.
🇺🇸 United States-Neutral
Communication Services and Energy Outperform Technology Sector; Strong Economic Performance Further Delays Interest Rate Cuts
US stock market tech sector rally eases, while communication equipment and energy sectors perform well, benefiting overall market trends. On the other hand, factors such as declining US unemployment rate and strong ISM manufacturing index help alleviate market concerns about recession risks. However, the continuous three-month increase in US core CPI in March exceeding expectations and a 2.5% growth in the annual Personal Consumption Index may lead to the Federal Reserve further delaying interest rate cuts or even raise concerns of potential rate hikes.
🇪🇺 Europe-Neutral
Eurozone Inflation Stabilizes; Switzerland Takes the Lead in Cutting Interest Rates
UK GDP contracted by 0.3% in Q4 2023, entering ‘Technical Recession’. While Eurozone inflation eases, allowing room for interest rate cuts. Swiss National Bank surprised the market with an interest rate cut to 1.5% in March. Meanwhile, the Russian president Putin’s successful re-election fuels the expectations of the continued Russia-Ukraine conflict, and geopolitical tensions intensify with the Israel-Palestine Conflict, raising concerns of disruptions in commodity supply and supply chains in the market.
🇯🇵 Japan-Slightly Positive
Japan Ended Negative Interest Rate Policy, Japanese Yen Reacted with a Soft Bias
Japan’s largest company, Toyota, agreed to 5.28% pay raise in 2024, which is the highest in 33 years, reflecting the confidence in the Japanese economy. The Bank of Japan ended eight years of negative interest rate policy, raising the benchmark rate from -0.1% to 0%-0.1%, and abolishing Yield Curve control (YCC) Policy, while continuing to purchase Japanese government bonds. Market expectations of gradual monetary policy adjustments by BOJ, without rapid rate hikes, keep the Japanese Yen’s trend soft, maintaining a level of around 152 Yen per US dollar.
🇨🇳 China-Neutral
The Macroeconomic Condition Has Slightly Improved, But Market Sentiment Remains Subdued
The annual Two Sessions, a major political event in China, has concluded in 2024. The GDP growth target for the year has been set at 5%, and the issuance of ultra-long-term special government bonds worth 1 trillion Yuan will begin this year and continue for several years. Domestic market demand is gradually recovering, with industrial profits increasing by 10.2% year-on-year. Additionally, Hong Kong’s March S&P PMI has rebounded to 50.9, surpassing the 50 threshold and indicating an expansion for the first time this year. However, Fitch Ratings has downgraded China’s outlook to negative, and the internal housing crisis continues to cast a shadow over the entire Chinese market, warranting continued observation.
Asia-Neutral
Asian Emerging Economies are Expected to Continue to Expand, and Attention should be Paid to The Upcoming Indian Election
According to the report from the Boao Forum for Asia, it predicts that the Asian economy will grow by 4.5%, and expects strong economic growth and regional economic integration in Asia to continue through 2024. The upcoming parliamentary election in India, where market expectations lean towards the re-election of Prime Minister Modi, may still introduce some uncertainty to Asian markets.