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Japans Topix index fell 2%.The yield on 30-year Japanese government bonds rose 5.5 basis points to 3.310%.On November 18th, a Citi research report indicated that Leapmotor (09863.HK) reported a net profit of RMB 150 million in the third quarter, in line with expectations. This was mainly due to approximately RMB 250 million in carbon credit revenue, a significant improvement compared to the net loss of RMB 690 million in the same period last year, and similar to the net profit level of the second quarter. Furthermore, the R&D expense ratio decreased by 1.5 percentage points quarter-on-quarter to 6.2%, and the administrative expense ratio also decreased by 0.4 percentage points quarter-on-quarter to 8.1%, keeping the net profit margin stable at 0.8% in the third quarter. Free cash flow reached RMB 3.84 billion during the period, a significant increase compared to RMB 1.2 billion in the previous quarter and RMB 1.3 billion in the same period last year. The company maintained its sales target of 1 million vehicles by 2026. The bank maintained its "Buy" rating with a target price of HKD 100.Hong Kong-listed apparel stocks surged, with Fast Retailing (06288.HK) rising over 5.8%, Luen Thai Holdings (00311.HK) rising over 11%, and Shanshan Brands (01749.HK) and others following suit.On November 18th, JPMorgan Chase issued a report stating that Geely Automobile (00175.HK) outperformed expectations in its third-quarter results, with core net profit exceeding the banks forecast by 4%. Net profit per vehicle rose 15% quarter-on-quarter to RMB 5,200. The bank stated that its third-quarter results were solid, mainly driven by economies of scale, a better product mix, and expanded export contributions. The bank believes that Geelys share price increase year-to-date is more driven by improved profitability than by expansion multiples of its target. During the earnings conference, management emphasized plans for new models next year, autonomous driving (AD) technology, and export strategies. The bank welcomes this and expects stronger growth momentum in the final quarter of this year and next year. The bank maintains its "Overweight" rating with a target price of HKD 24.

As investors anticipate US Services PMI, the USD/JPY pair falls to around 134.00

Daniel Rogers

Dec 05, 2022 14:09

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The USD/JPY pair attempted to surpass the immediate barrier of 134.50 during the Tokyo session. As investors anticipate fresh momentum from U.S. Services PMI data, the asset is expected to remain on tenterhooks. As Federal Reserve (Fed) policymakers do not expect the current rate of interest rate hikes to continue, the risk profile remains favorable.

 

Charles Evans, president of the Chicago Fed, was quoted by Reuters as saying on Friday, "We will likely have a little higher Fed policy rate peak even as we slow the pace of rate hikes."

 

The US Dollar Index (DXY) is hovering near its immediate support level of 104.50 and is likely to test Friday's low at 104.40. In the context of a significant decline in the desirability of safe-haven assets, the risk appetite theme is likely to continue exerting pressure on US Dollar bulls.

 

In the interim, 10-year US Treasury rates have increased after falling below 3.50 percent during the Asian session, as market sentiment turns cautious prior to the release of US Services PMI data. The projected economic statistics is 55.6, a decline from the previous report of 54.4.

 

The New Orders Index is expected to rise from 56.5 to 58.5 on the US Services PMI spectrum. This indicates that future demand will be robust, which might de-anchor short-term inflation expectations and ruin the risk-on profile.

 

On the Tokyo front, Governor of the Bank of Japan (BOJ) Haruhiko Kuroda stressed the potential of a decrease in inflation beginning in CY2023. This may encourage the BOJ to continue easing monetary policy in order to keep inflation near the 2% target. Total Household Expenditures statistics will be of the utmost relevance in the future. The economic data are projected to increase annually by 3.4%, up from 2.3% in the previous report.

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