Mini Program: Daily summary of investment bank/institutional views
1. Citi: China's full-year GDP growth forecast has been raised to 5%
Citigroup Greater China Chief Economist Yu Xiangrong recently wrote that since the beginning of the year, China's economic data has exceeded expectations more often than it has fallen short of expectations, the decline in real estate has begun to show signs of convergence, and a new round of policies to stabilize growth has been implemented at a faster pace. "At least from a cyclical perspective, we believe that there is no need to be overly pessimistic about China's medium-term economic growth prospects." Citigroup said that it has recently raised its forecast for China's GDP growth this year from the original 4.6% to 5%, and expects that the full-year growth target can be achieved. (China News Service)
2. Citi: Japanese stocks face three major short-term risks
Ryota Sakagami, chief global market strategist at Citigroup, wrote in a report that the Nikkei 225 index has lost momentum and is fluctuating between 38,000 and 41,000 points. It may remain weak in the short term due to several factors. First, major Japanese companies may give conservative forward guidance on earnings. Second, if the Bank of Japan raises its inflation expectations in its upcoming outlook report, the yen may strengthen, sparking speculation about an early rate hike. Finally, short-term stock investors may tend to turn from Japan to China.
3. Morgan Stanley: US stock market trends show that investors firmly believe the economy will "not land"
Morgan Stanley equity strategists said recent moves in U.S. stocks suggest investors are beginning to price in a "no landing" scenario for the economy, where growth is expected to accelerate. For months, investors have been preparing for a "soft landing" for the economy, where modest growth is accompanied by a retreat in inflation from high levels. "However, macro data and equity market action have begun to support a no landing outcome," Morgan Stanley strategists led by Michael Wilson said in a note. Sectors typically tied to economic growth, such as financials, energy and industrials, have all performed strongly so far this year, outperforming the S&P 500's 9% gain so far this year, while materials, another economically sensitive sector, has also performed well. Morgan Stanley said the direction of U.S. Treasury yields will also have an impact on the performance of economically sensitive sectors of the market.
4. Goldman Sachs: European stocks are expected to outperform the U.S. in the next 12 months
Goldman Sachs strategists say European stocks could outperform the U.S. over the next 12 months as the region is currently trading at a wider discount to historical levels, especially in sectors such as financials, energy and consumer discretionary. Strategists led by Sharon Bell said they believe Europe will benefit from a rebound in global PMIs, especially an upturn in the manufacturing cycle, and expectations of interest rate cuts starting in June. For the upcoming cyclical rebound, they recommend buying sectors such as banks and energy, as well as small-cap stocks, which will also benefit from a modest increase in merger and acquisition activity. However, they believe there are some persistent structural issues in the region, such as low equity capital allocation, low liquidity, sluggish economic growth trends, and political/regulatory issues. With these in mind, investors are still likely to continue to invest in sectors such as healthcare, technology and luxury goods.
5. Goldman Sachs: The slowdown in wage growth in the eurozone is expected to encourage the European Central Bank to accelerate interest rate cuts
Wage growth in the 20-member euro zone will continue to slow in the coming months, raising the possibility that the European Central Bank will cut interest rates faster, Goldman Sachs economists said in a report. Despite evidence of a slowdown in wage growth late last year, policymakers have been concerned that inflation in the euro zone may still persist, and wage growth has been their core concern. The slowdown in wage growth should continue as real wages approach comfortable levels and the labor market begins to unwind from its current record tightness. "We expect wage growth to slow sharply in the second half of the year, with much of it coming from the direct impact of inflation. This should tip the ECB towards a faster pace of rate cuts, possibly with consecutive cuts starting in June."
6. Barclays: Rising Brent oil prices have a slight negative impact on economic growth in emerging Asian markets
Barclays analysts said in a report that a rise in Brent crude oil prices from a range of $80 to $85 per barrel to $90 could have a slightly negative impact on emerging Asian economies that are mainly oil importers. "Our estimates suggest that a $10 increase in Brent crude oil would reduce GDP growth in most emerging Asian economies by a relatively modest 0.1-0.2 percentage points." Malaysia is an exception, as it is a net exporter of oil and gas and will certainly benefit, while the impact on Indonesia is more ambiguous, with higher oil prices on their own being negative for its economy, but if higher oil prices are part of a broader rise in commodity prices, the overall impact could be positive.
7. Commerzbank: The importance of US economic news to the dollar has decreased
Ulrich Leuchtmann, a foreign exchange strategist at Commerzbank, said in a report that the dollar initially strengthened after the release of much stronger-than-expected U.S. employment data last Friday, but quickly succumbed to profit-taking, indicating that the importance of U.S. economic news to the dollar has decreased. He said: "U.S. economic growth may still be a factor supporting the dollar, but this is not a reason for a significant strengthening of the dollar. The market seems to have reached a consensus that the current dollar exchange rate and U.S. economic growth data are consistent, so even if the employment report is unexpectedly strong, its impact will disappear.
8. BNP Paribas: ECB meeting unlikely to impact credit markets
Analysts at BNP Paribas said in a note that the bar is high for the ECB's meeting on Thursday to have an impact on credit markets. They expect the ECB to keep interest rates unchanged this week but to cut rates by 100 basis points over the year, starting in June. However, that expectation is already priced in. "In our view, the ECB meeting is unlikely to have an impact on credit markets." They said credit markets are not sensitive to the exact number of rate cuts as long as they are imminent.
9. ING: Rising German industrial output indicates a gradual improvement in the economy
Carsten Brzeski, an economist at ING, said in a note that German first-quarter industrial data points to an end to stagnation. Growth in the construction sector of 7.9% was particularly encouraging, helped by mild winter weather and a general improvement in the real estate sector. However, this was more of a cyclical improvement than a structural one, with output still around 8% below pre-pandemic levels, and private consumption weighing on the economy in the first few months of the year. "Nevertheless, some lower interest rates due to expectations of ECB rate cuts, lower gas and electricity prices, and the resilience of the U.S. economy should provide more relief to German industry in the coming months," he added.
10. Capital Economics: Despite an improvement in February, Germany's industrial outlook remains bleak
Franziska Palmas, an economist at Capital Economics, said that despite an increase in output in the first two months of the year, the outlook for Germany's industrial sector remains bleak due to weak demand and declining competitiveness. She said in a report that while the month-on-month increase of 2.1% in February confirmed the industry's improved start to 2024, the survey results are consistent with the year-on-year contraction in industrial activity in March. This shows that demand remains weak, new orders are at their lowest level since 2013 (excluding the epidemic period), and construction companies are facing a surge in order cancellations. Therefore, the best result for German industrial production this year is expected to be stagnation.
11. MUFG: The trend of the US dollar in April is closely related to the US CPI and PPI data this week
Lee Hardman and Abdul-Ahad Lockhart, FX analysts at MUFG, said in a note that this week could be crucial for the dollar's direction for the rest of April, as the latest U.S. CPI (Wednesday) and PPI (Thursday) will be released. "After the surprise increase in U.S. inflation in January and February, a surprise increase in March would be more difficult to interpret," they said. They added that the net increase of 303,000 nonfarm payrolls last Friday, higher than the expected 200,000, has raised new doubts about whether the Federal Reserve needs to start cutting interest rates as early as June.
The article is forwarded from: Jinshi Data
