Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Head of FX Strategy
Key points:
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The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
Equities: US stocks were choppy but ended lower following the Fed’s announcement and a slew of economic data out of the US pointing to broad weakness. However, US equity futures are pointing higher with Fed Chair Powell still ruling out the prospect of a rate hike, which meant he didn’t meet the high hawkish bar that the market had set for him, and QT tapering announcement surprised dovish.
Chip stocks lagged with AMD down 9% after its disappointing AI chip sales forecast, while Super Micro Computer slid 14.0% following the company's quarterly revenue miss. Amazon was up 2.2% on better-than-expected quarterly results as interest in AI helped drive cloud-computing growth, while Qualcomm rose 4% in after-market on stronger-than-expected guidance on smartphone recovery. Meanwhile, Starbucks tumbled 15.9% after the coffee chain cut its sales forecast as it posted the first drop in same-store sales in nearly three years. Apple earnings on tap today, along with Danish obesity drugs leader Novo Nordisk.
Japan markets plunged at the open in Asia, slipping back below 38k as yen strengthened on suspected intervention. China markets will be closed for Golden Week and return on Monday.
FX: Dollar pushed lower as Fed Chair Powell could not clear the high hawkish bar we had highlighted in the FOMC preview and the Saxo Market Call earlier this week. Still, the path for a second round of Japanese intervention was cleared as USDJPY hovered near 158, and the last few minutes of NY trading saw the pair plunge sharply lower to 153 in a suspected intervention move. The move, once again, has all the hallmarks of an intervention, given the timing of thin liquidity and an eventual 5-yen drop, but pair is back above 155.50 now. Fading of the yen strength could likely be quicker now after the two suspected Japanese intervention clearing out speculators for now. AUDUSD also rose to 0.6540 after a sharp drop to 0.6465 given the miss in retail sales we highlighted in our FX note. 100DMA at 0.6584 is still likely to cap AUDUSD and the move in AUDNZD to 1.10+ remains at risk of reversal. GBPUSD was the underperformer, given the weak equity sentiment and 200DMA at 1.2550 providing resistance. USDCAD moved lower towards 1.3720 with Bank of Canada Governor Macklem’s comments still hinting at a rate cut coming soon.
Commodities: After some erosion in geopolitical premium, now demand concerns came into limelight for oil traders as EIA data showed a surge in crude stockpiles and Fed Chair Powell hinted at the delay in starting the easing cycle. WTI dropped below $80/barrel to levels seen in mid-March, and Brent was below $84. Gold and silver rebounded, in a relief move as the Fed meeting outcome didn’t meet the high hawkish bar and the next move is still seen to be a rate cut. However, base metals came under pressure, with copper in correction after touching 2-year highs earlier this week.
Fixed income: Treasuries rose (yields fell) with the Fed not meeting the high hawkish bar, US data mostly disappointing - from ISM manufacturing to JOLTS – and the QRA mostly uneventful. The Fed’s QT taper announcement held more weight for the bond market, and that came in somewhat more than expected while the next move is still seen as a rate cut.
Macro:
Macro events: Chinese Market Holiday (Labor Day), Swiss CPI (Apr), EZ Manufacturing Final PMI (Apr), US Durable Goods (Apr)
Earnings: Novo Nordisk, Linde, Booking, Apple, Amgen, Shell, ConocoPhillips, Cigna, Regeneron Pharmaceuticals, National Australia Bank, Macquarie Group, Vestas, Mærsk, Ørsted, Genmab, Pandora, Universal Music, ING, ArcelorMittal, Coinbase, Fortinet, Block, Moderna, Cloudflare, Standard Chartered, Shell
News:
For all macro, earnings, and dividend events check Saxo’s calendar.
For a global look at markets – go to Inspiration.