Investment Daily

19 March 2021

Investment Daily

US stocks fell, led by US stocks fall as higher Treasury yields weigh on tech tech and energy, as US equities declined on Thursday, as higher Treasury yields weighed on shares of technology companies and other high-growth stocks, while energy stocks dropped amid a fall in oil prices. The S&P 500 fell 1.5%. Treasury yields rose US Treasuries fell (yields rose), reflecting investor expectations for faster economic recovery amid accommodative monetary policy, although weakness in stocks helped Treasuries pared some losses. Five- year and 10-year yields climbed 6bp and 7bp to 0.86% and 1.74%, respectively, while 30-year yields ended European stocks rose as 3bp higher at 2.45%. sector rotation European stocks rose on Thursday as investors continued to rotate into sectors exposed to the economic recovery. The Euro Stoxx 50 advanced 0.5%, with financials and industrials stocks leading gains. continued; bonds fell Germany’s industrials-heavy DAX outperformed (+1.2%), reaching a fresh record high, while France’s CAC 40 lagged (+0.1%) amid concerns that rising coronavirus cases could lead to new restrictions. European government bonds ended lower (yields higher) taking a lead from US markets. Benchmark 10- Asian stock markets year German bund yields rose 2bp to -0.27%. UK gilts underperformed, with 10-year yields up 4bp to 0.87% traded lower as after the Bank of England kept the rate of asset purchases unchanged. Most Asian stock markets traded lower on Friday as geopolitical tensions resurfaced and weighed on risk geopolitical tensions sentiment during high-level talks between the US and China. An overnight increase in US bond yields further dragged on growth stocks. Mainland China's Shanghai Composite fell 1.7%, while Taiwan's Taiex gave up resurfaced 1.3%. Japan's Nikkei 225 fell 1.4% after the Bank of Japan made changes to its stock-buying program to end purchases of ETFs tracking the Nikkei 225 and to only purchase funds tracking the broader Topix index; the Topix edged 0.2% higher. Elsewhere, Korea's Kospi dropped 0.9% and Australia's ASX200 fell 0.6%.

Crude oil prices declined on Thursday, as efforts to distribute Covid-19 vaccines in some parts of the world stalled, casting uncertainty over the speed of an economic recovery and oil demand rebound. Signs of softer demand in Asia and US Gulf Coast refineries still recovering from a cold blast last month put short-term pressure on physical oil demand, while a stronger US dollar capped the appeal of commodities priced in the currency. WTI crude for April delivery fell sharply by 7.1% to settle at USD60.0 a barrel.

Key Data Releases and Events

Yesterday In the UK, the Bank of England kept Bank Rate on hold at 0.1% and the Asset Purchase Target at GBP895bn as expected. Officials also maintained the pace of bond purchases at GPB4.4bn per week, reiterating that the net asset purchases are likely to end at the end of the year. The accompanying minutes to the meeting suggested that policymakers are not concerned with the recent rise in bond yields, viewing it as consistent with a strong economic recovery on the back of ongoing fiscal support and rapid vaccine rollout.

Releases due today (19 March 2021) Country Indicator Period Survey Prior Japan National CPI ex Fresh Food, Energy (yoy) Feb 0.2%A 0.1% Japan Bank of Japan Interest Rate Decision Mar -0.10%A -0.10% Russia Central Bank of Russia Interest Rate Decision Mar 4.25% 4.25% A=Actual The Bank of Japan, maintained its key policy rate at -0.1% however made some adjustments to its monetary policy tools including confining purchases of ETFs to only Topix-linked funds, abandoning a JPY6 trillion guide for annual ETF purchases, but maintaining an upper limit of JPY12 trillion worth of purchases. It also expanded the trading range of 10-year Japanese government bond yields from -0.2 to 0.2% to -0.25 to 0.25%. The BoJ said they will maintain its price stability target of 2% and would continue expanding the monetary base until core CPI was sustainably above target. Meanwhile, Japan's national CPI inflation (ex food and energy) for February edged higher to 0.2% yoy as expected, reflecting nascent signs of a firmer recovery in domestic demand. The headline inflation reading remained in deflation at -0.4% yoy. Looking ahead, the lifting of the state of emergency measures in Tokyo could ease downward price pressures.

Past performance is not an indication of future returns Produced by the Global Investment Strategy Unit ([email protected])

Market Snapshot

1-day 1-month 3-month 1-year YTD 52-week 52-week Fwd Close Change Change Change Change Change High Low P/E Equity Indices (% ) (% ) (% ) (% ) (% ) (X)

World MSCI AC World Index (USD) 673 -0.7 -0.9 5.2 66.7 4.2 687 379 20.3

North America US Dow Jones Industrial Average 32,862 -0.5 4.3 8.9 63.6 7.4 33,228 18,214 21.4 US S&P 500 Index 3,915 -1.5 0.2 5.6 62.5 4.2 3,984 2,192 22.7 US NASDAQ Composite Index 13,116 -3.0 -5.5 2.8 83.4 1.8 14,175 6,631 32.4 Canada S&P/TSX Composite Index 18,836 -0.8 2.5 7.4 54.8 8.0 19,037 11,173 16.8

Europe MSCI AC Europe (USD) 519 0.6 1.2 5.0 62.8 4.4 521 307 16.9 Euro Stoxx 50 Index 3,868 0.5 4.1 9.1 57.6 8.9 3,875 2,345 18.8 UK FTSE 100 Index 6,780 0.3 2.3 3.8 31.6 4.9 6,904 4,923 14.8 Germany DAX Index* 14,776 1.2 5.6 8.4 71.6 7.7 14,804 8,258 16.3 France CAC-40 Index 6,063 0.1 5.0 9.7 57.3 9.2 6,089 3,691 18.7 Spain IBEX 35 Index 8,625 0.3 5.8 7.3 34.8 6.8 8,740 6,148 19.0 Italy FTSE MIB Index 24,360 0.3 5.3 10.8 57.5 9.6 24,459 15,038 14.2

Asia Pacific MSCI AC Asia Pacific ex Japan (USD) 695 0.4 -5.6 7.1 77.2 5.0 746 384 17.8 Japan Nikkei-225 Stock Average 29,792 -1.4 -0.8 11.3 80.0 8.6 30,715 16,358 22.2 Australian Stock Exchange 200 6,708 -0.6 -1.3 0.5 40.3 1.8 6,938 4,403 19.3 Hong Kong Hang Seng Index 28,890 -1.8 -5.7 9.0 33.1 6.1 31,183 21,139 14.8 Shanghai Composite Index 3,405 -1.7 -7.9 0.3 26.0 -2.0 3,732 2,647 12.4 Hang Seng China Enterprises Index 11,246 -2.0 -7.1 7.3 31.4 4.7 12,272 8,290 12.9 Taiwan TAIEX Index 16,070 -1.3 -1.7 12.8 85.1 9.1 16,579 8,524 17.4 Korea KOSPI Index 3,040 -0.9 -2.2 9.6 108.5 5.8 3,266 1,439 14.3 India SENSEX 30 Index 49,237 0.0 -3.2 4.8 74.1 3.1 52,517 25,639 29.3 Indonesia Jakarta Stock Price Index 6,322 -0.4 1.5 3.6 54.0 5.7 6,505 3,912 16.8 Malaysia Kuala Lumpur Composite Index 1,620 -0.5 2.2 -2.0 32.8 -0.5 1,696 1,208 13.8 Philippines Stock Exchange PSE Index 6,436 -2.9 -7.1 -11.5 39.2 -9.9 7,432 4,039 17.6 Singapore FTSE Straits Times Index 3,139 0.0 9.0 10.2 35.8 10.4 3,149 2,208 16.3 Thailand SET Index 1,556 -0.8 3.7 5.0 49.0 7.4 1,585 1,011 20.1

Latam Argentina Merval Index 48,599 -2.6 -4.7 -7.2 114.5 -5.1 56,114 22,087 9.9 Brazil Bovespa Index* 114,835 -1.5 -3.0 -2.7 68.1 -3.5 125,324 61,691 11.1 Chile IPSA Index 4,879 -0.6 5.5 15.9 58.3 16.8 4,932 2,876 15.5 Colombia COLCAP Index 1,326 -1.3 -2.0 -7.1 47.3 -7.8 1,468 886 0.1 Mexico S&P/BMV IPC Index 47,572 -0.2 6.0 8.4 35.4 8.0 48,314 32,503 15.9

EEMEA Russia MOEX Index 3,505 -0.1 0.5 6.1 52.7 5.7 3,602 2,074 7.4 South Africa JSE Index 66,740 0.4 -2.0 10.6 74.2 11.3 69,404 37,178 11.3 Turkey ISE 100 Index* 1,551 -0.7 -1.2 9.5 81.0 4.4 1,589 825 7.5 *Indices expressed as total returns. All others are price returns.

3-month YTD 1-year 3-year 5-year Change Change Change Change Change Equity Indices - Total Return (% ) (% ) (% ) (% ) (% )

Global equities 5.6 4.5 69.4 37.8 86.5 US equities 5.0 3.9 68.1 52.9 109.1 Europe equities 5.4 4.8 66.2 17.3 48.6 Asia Pacific ex Japan equities 7.6 5.3 81.0 28.7 91.0 Japan equities 6.3 5.1 63.2 24.2 70.3 Latam equities -5.0 -4.6 59.9 -15.9 24.0 Emerging Markets equities 6.6 4.6 79.5 20.2 83.1 All total return data quoted in USD terms and subject to one day-lag. Data sourced from MSCI AC World Total Return Index, MSCI USA Total Return Index, MSCI AC Europe Total Return Index, MSCI AC Asia Pacific ex Japan Total Return Index, MSCI Emerging Latin America Total Return Index, and MSCI Emerging Markets Total Return Index. Total return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given period.

Source: Bloomberg, HSBC Asset Management. Data as of yesterday’s respective market close, except for Asia Pacific equity markets, Japanese bond yields. Data for BarCap GlobalAgg, BarCap US Corporate Index, BarCap Global High Yield and LME copper are as of previous two trading days’ market close. All currencies and commodities show today’s data as at 07:50am BST. Past performance is not an indication of future returns 19/03/2021 Investment Daily 2

Market Snapshot 2

1-day 1-month 3-month 1-year YTD Close Change Change Change Change Change Bond indices - Total Return (Index Pts.) (% ) (% ) (% ) (% )

BarCap GlobalAgg (Hedged in USD) 582 -1.1 -1.1 -2.5 3.6 -2.7 JPM EMBI Global 892 -1.1 -2.5 -4.1 22.5 -4.4 BarCap US Corporate Index (USD) 3,366 -12.8 -3.0 -4.8 15.5 -5.5 BarCap Euro Corporate Index (Eur) 264 -0.3 -0.4 -0.9 9.7 -0.9 BarCap Global High Yield (Hedged in USD) 544 -1.0 -1.1 0.1 29.8 -0.4 Markit iBoxx Asia ex-Japan Bond Index (USD) 226 -0.1 -1.0 -0.8 11.6 -1.0 Markit iBoxx Asia ex-Japan High-Yield Bond Index (USD) 290 0.5 0.2 1.2 23.8 0.8 Total return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given period.

1-day 1-month 3-months 1-year Year End Bonds Close Ago Ago Ago Ago 2020 US Treasury yields (%) 3-month 0.00 0.00 0.03 0.08 -0.03 0.06 2-Year 0.15 0.13 0.10 0.12 0.45 0.12 5-Year 0.86 0.80 0.58 0.38 0.69 0.36 10-Year 1.71 1.64 1.34 0.95 1.14 0.91 30-Year 2.45 2.42 2.13 1.69 1.78 1.64

Developed market 10-year bond yields (%) Japan 0.11 0.11 0.11 0.01 0.06 0.02 UK 0.87 0.83 0.70 0.25 0.72 0.19 Germany -0.27 -0.29 -0.31 -0.57 -0.20 -0.57 France -0.02 -0.04 -0.06 -0.33 0.22 -0.34 Italy 0.69 0.70 0.62 0.56 1.74 0.54 Spain 0.37 0.38 0.35 0.04 0.88 0.04

1-day 1-month 3-months 1-year Year End 52-week 52-week Currencies (vs US dollar) Latest Ago Ago Ago Ago 2020 High Low

Developed markets EUR/USD 1.19 1.19 1.21 1.23 1.07 1.22 1.23 1.06 GBP/USD 1.40 1.39 1.40 1.35 1.15 1.37 1.42 1.14 CHF/USD 1.08 1.08 1.12 1.13 1.01 1.13 1.14 1.01 CAD 1.25 1.25 1.26 1.28 1.45 1.27 1.46 1.24 JPY 108.8 108.9 105.5 103.3 110.7 103.3 111.7 102.6 AUD 1.29 1.29 1.27 1.31 1.74 1.30 1.77 1.25 NZD 1.39 1.40 1.37 1.40 1.76 1.39 1.79 1.34

Asia HKD 7.77 7.76 7.75 7.75 7.76 7.75 7.77 7.75 CNY 6.50 6.51 6.46 6.54 7.11 6.53 7.18 6.42 INR 72.49 72.53 72.65 73.57 75.03 73.07 76.91 72.27 MYR 4.11 4.11 4.04 4.04 4.41 4.02 4.45 4.00 KRW 1,131 1,124 1,106 1,100 1,286 1,086 1,283 1,080 TWD 28.45 28.32 28.14 28.31 30.47 28.30 30.47 27.76

Latam BRL 5.56 5.56 5.39 5.08 5.10 5.20 5.97 4.82 COP 3,571 3,571 3,559 3,420 4,106 3,430 4,152 3,400 MXN 20.36 20.49 20.43 19.95 24.03 19.91 25.78 19.55 ARS 91.29 91.29 89.15 82.84 63.55 84.15 91.30 63.57

EEMEA RUB 74.12 74.31 74.12 73.34 79.17 74.41 81.39 68.04 ZAR 14.68 14.75 14.69 14.54 17.47 14.69 19.35 14.40 TRY 7.27 7.32 6.97 7.62 6.54 7.44 8.58 6.38

Latest 1-day 1-month 3-month 1-year YTD 52-week 52-week ago Change Change Change Change High Low Commodities (% ) (% ) (% ) (% ) Gold 1,743 1,736 -2.3 -7.4 18.5 -8.2 2,075 1,455 Brent Oil 63.5 63.3 2.2 21.7 65.1 22.7 71 33 WTI Crude Oil 60.3 60.0 1.8 22.1 78.8 23.8 68 28 R/J CRB Futures Index 187 187 -0.8 12.4 46.6 11.5 196 101 LME Copper 9,056 9,056 1.6 13.4 87.7 16.6 9,617 4,371

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Past performance is not an indication of future returns Produced by the Global Investment Strategy Unit ([email protected])

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