Escalating Tensions in the Middle East, Focus on Key Data Releases This Week

　　Image Source: Yahoo Finance

　　According to reports from the Global Times, on April 14 local time, the Iranian Islamic Revolutionary Guard Corps launched a large-scale missile and drone attack on Israeli targets. This attack marks Iran's first direct strike on Israel, leading to a renewed escalation of tensions in the Middle East.

　　The development of the situation in the Middle East is also one of the key factors affecting the market this week. As the region accounts for one-third of global oil production, developments in the situation may push oil prices higher against the trend, with a focus on the flow of oil through the Strait of Hormuz.

　　If oil prices surge significantly, safe-haven sentiment will bolster the dollar, exacerbating U.S. inflation risks and once again dampening expectations of interest rate cuts, potentially leading investors to further flock to U.S. Treasury bonds, worsening the fundamentals of U.S. bonds.

　　Due to the impact of the tense situation in the Middle East, investors in early Asian trading showed extreme caution. The spot price of gold approached historic highs, while silver and copper futures prices rose, and the dollar remained relatively stable. Additionally, the stock markets in Japan and South Korea were affected and fell.

　　On April 14, the Israeli stock market staged a “deep V rebound,” closing up by 0.27%, while the Saudi TASI index closed down by 0.3%.

　　Image Source: Wall Street

Monday Opening Data

Japanese and South Korean Stock Markets Decline at Opening

　　On Monday (April 15), the Nikkei 225 index opened down by 1.2%, at 39,056.93 points, and as of the drafting time, it fell by 1.04% to 39,114.19 points. The Tokyo Stock Price Index (TOPIX) opened down by 1%, and as of drafting time, it fell by 0.51% to 2,745.69 points.

　　The KOSPI index in South Korea opened down by 0.8%, and as of drafting time, it fell by 1.15%, wiping out all gains made since the beginning of the year.

Most Commodities Strengthen

　　In early trading in the Asia-Pacific markets on Monday, the spot price of gold rose by 0.8% to $2,363.51 per ounce, with gains briefly expanding to 1.2% and reaching above $2,370 per ounce, close to the historic high of $2,431.52 set last Friday.

　　Institutional analyst James Hyerczyk pointed out that gold prices are likely to continue to remain at high levels or even rise in the coming week.

　　Silver prices showed strong performance, currently up by 0.75% at $28.15 per ounce.

　　In the futures market, Brent crude oil prices rose by 0.44% to $90.18 per barrel, while WTI crude oil prices slightly declined, currently priced at $85.63 per barrel. Close attention is needed to the flow of oil through the Strait of Hormuz.

　　At the London Metal Exchange (LME), futures prices of non-ferrous metals surged. Copper and zinc rose by over 2%, nickel rose by over 7%, aluminum rose by over 6%, and lead rose by over 1%. The fundamental reason behind this upward trend is the sanctions imposed by the UK and the US on Russian metals, restricting the trading of copper, aluminum, and nickel.

Slight Decline in the Dollar

　　The US dollar index fell slightly by 0.07% to 106.03 on Monday. The dollar fell by about 0.1% against the euro and the yen, respectively.

　　Image Source: TradingView

Key Data This Week

　　Key data to watch include China's economic data for March, US retail sales data for March, as well as CPI data from the Eurozone, UK, Japan, and Canada, among others. In addition, the Federal Reserve will release the Beige Book, and the IMF and World Bank will hold their spring meetings. The US earnings season will also reach its peak, and TSMC will hold an investor conference. China's “Guo Jiu Tiao” and geopolitical risks will also be a focus this week.

China's March Economic Data

　　At 10:00 am on Tuesday (April 16), the National Bureau of Statistics of China will release China's economic data for March, including GDP, industrial added value, fixed asset investment, and total retail sales of consumer goods for the first quarter.

　　Multiple institutions predict that, with the gradual fading of factors such as the Lunar New Year and low base numbers, indicators such as industrial and consumer activities in March may experience a certain degree of decline. However, the growth rates of manufacturing and infrastructure investment are expected to remain relatively high.

　　Furthermore, the third “Guo Jiu Tiao” imposes stricter requirements on dividends, repurchases, and market value management of listed companies. In the medium to long term, the reform will optimize the capital market environment, thereby better consolidating the value foundation of the A-share market. Enterprises with sound financial conditions, abundant cash flow, and generous dividend policies are expected to enjoy valuation uplifts. At the same time, attention should be paid to the delisting risks faced by some companies, especially those with significant financial losses or major risks of illegal activities.

　　Several securities strategy analysts believe that this reform will help enhance the endogenous stability of the capital market and have a positive impact on the market's medium to long-term performance. In addition, based on the situations after the issuance of the previous two “Guo Jiu Tiao,” the overall market style is relatively favorable in the short term.

US Retail Data

　　The US retail data will be released at 8:30 pm on Monday (April 15). This data, known as “terror data,” usually has a significant impact on the financial markets.

　　The latest CPI data exceeded market expectations, leading investors to reduce their bets on the imminent rate cuts by the Federal Reserve once again. In addition, the upcoming US retail sales data will be another key factor for the Federal Reserve to assess the prospects of the US economy.

　　Analysts generally expect that the month-on-month growth of retail sales in March will be 0.3%, slowing down from 0.6% in the previous month, indicating a weakening of consumer momentum. They point out that the Easter holiday may have brought forward some consumption to March, so the data for April may continue to decline.

CPI Data in Japan and the Eurozone

　　Japan will release its CPI data for March at 7:30 am on Friday (April 19). It is widely expected that the CPI data for March will remain flat or slightly increase compared to February, but the year-on-year growth rate of core CPI is expected to decrease from 2.8% to 2.6%. Investors still have uncertainty about the future trend of inflation pressure in Japan, so the expectations for further rate hikes by the Bank of Japan are not high. This situation has been putting pressure on the yen, especially after the US CPI data for March exceeded expectations, causing the USD/JPY exchange rate to break through the “warning line” of 152.

　　At 5:00 pm on Wednesday (April 17), the final harmonized CPI for March in the Eurozone will be released. Analysts generally expect the year-on-year growth rate of the harmonized CPI in the Eurozone for March to drop to 2.4%, exceeding expectations and contrasting sharply with the CPI data in the US, which exceeded expectations.

Other Important Data

　　TSMC plans to release its financial report on April 18 and will hold an investor conference. The market will closely watch six important aspects of TSMC's future operations, including business outlook, capital expenditure, the impact of electricity price adjustments on gross margin, global layout, progress in advanced processes, and expansion of advanced packaging.

　　Since hitting bottom in October 2022, TSMC's market value has more than doubled. Investors' bets on the sustained demand for advanced AI chips produced by the company for companies like Nvidia have offset concerns about the global decline in smartphone sales.

　　This week, giants such as Goldman Sachs, Morgan Stanley, Bank of America, ASML, TSMC, and Netflix will successively release their earnings, and the profitability of these companies will once again be the focus of the market.

　　The International Monetary Fund (IMF) and the World Bank will hold their 2024 spring annual meetings at their headquarters in Washington, DC, from April 15 to 20. The meeting will discuss global hot topics, including the outlook for the world economy, economic development trends, climate financing, and banking crises. The IMF and the World Bank hold two plenary meetings every year, including the spring meetings and the annual meetings in autumn.