Global Market Quick Take: Europe – 28 February 2024 Global Market Quick Take: Europe – 28 February 2024 Global Market Quick Take: Europe – 28 February 2024

Global Market Quick Take: Europe – 28 February 2024

Macro 3 minutes to read
Saxo Strategy Team

Summary:  European and US equity futures trade steady ahead of Thursday’s core PCE deflator, the Fed’s preferred inflation gauge, while stocks in Asia, except South Korea traded mostly lower overnight. Wall Street saw another, albeit small, positive session on Tuesday with the small-cap Russell 2000 stealing the limelight for a change, rising 1.3%. Snowflake and Salesforce report earnings today, with the potential for an upside surprise in Snowflake due to generative AI. Bitcoin meanwhile surpassed $57000 as the current strong momentum continues to attract buyers. Bonds and the dollar trade steadily while the NZD slipped after the central bank softened its threat to hike rates.


The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.

Equities: Chinese equities are down 0.8% in today’s session as the budget report failed to lift sentiment as it did not point towards enough fiscal measures to kickstart the economy. US and European equity futures are flat in early trading hours and are generally trading a bit below last week’s all-time high levels on the back of strong Nvidia earnings. Apple announced yesterday that it is winding down its efforts to manufacture its own electric vehicles after spending 10 years on the project. The fact that Apple shares rose on the news suggests the market was not discounting any value from this bet. In Europe, SAP has been one of the best performing mega cap stocks and the momentum remains strong with some analysts seeing even more upside. Earnings focus today shifts to US technology with earnings results from Salesforce and Snowflake after the US market close.

FX: The dollar trades sideways ahead of Thursday’s core PCE print with the most notably exceptions being weakness in the antipodeans, led by NZD which fell 1% overnight after RBNZ softened its threat to hike rates. The AUD and CAD, two commodities focused currencies also trade lower on the week while the EURUSD remains stuck in a tight range around 1.0850. USDJPY holds above 150 despite Tuesday’s the higher-than-expected inflation print in Japan

Commodities: WTI continued higher on Tuesday, supported by expectations OPEC+ will extend voluntary cuts when officials meet next week, before pausing after the API reported a surprise 8.4m barrel weekly stock rise. The EIA report due later today with surveys pointing to a 2.5m barrel rise. Base metals traded higher with iron ore stabilizing following recent steep losses while gold traded softer with traders showing no appetite to charge higher ahead of the US core PCE print. An index tracking key grains trade higher for a third day after hitting a three-year low. In the week to February 20 speculators held a combined record short in wheat, soybeans and corn futures.

Fixed income: Yesterday’s $42 billion 7-year note auction received solid demand despite being the largest since May 2022. Investors were attracted to the auction’s high yield of 4.327%, the highest since October last year and the fourth-highest auction yield on record. Yet, Treasuries ended the day near their worst levels as a block seller in ultra-long futures ignited a bear steepening of the yield curve. Today, US Treasury bonds will likely gain from the end-of-month index rebalancing. Yet, markets will closely watch Federal Reserve speakers ahead of the PCE deflator on Friday. In Europe, ten-year Bund yields broke above the 100-day simple moving average. At the same time, the BTP-Bund spread remains stable at around 144bps, the lowest since February 2022, as Italy continues with successful retail issuance of BTP Valore. The focus is on consumer confidence numbers and the ECB’s Muller speech today.

Macro: US consumer confidence in February fell to 106.7 from 110.9 (downwardly revised from 114.8) and beneath the expected 115.0. Present Situation and Expectations fell to 147.2 (prev. 154.9) and 79.8 (prev. 81.5), respectively, with the latter dipping back beneath 80 which often signals a recession ahead. January Durable Goods data was also soft with the headline dipping 6.1%, deeper than the -4.5% forecast, while the prior was revised down to -0.3% from 0.0%. Besides inflation data from the Eurozone and US PCE inflation, the market will be watching a slew of Fed speakers this week.

Technical analysis highlights: S&P 500 uptrend stretched a correction could unfold, key support at 4,920. Nasdaq 100 uptrend stretched, key support at 17,478. DAX uptrend potential to 17,660, support at 17,326. EURUSD failing to move higher likely range bound 1.08 -1.09. GBPUSD rejected at resistance at 1.27. USDCAD resuming uptrend likely move to 1.3625 USDJPY above resistance at 149.75, eyeing 152. EURJPY uptrend potential to 164.30. AUDUSD below support at 0.6520 resuming down trend with potential to 0.64. Gold if closing above 2,035 could push to 2,065, below 2,015 bearish trend. 10-year T-yields range bound 4.35-4.20

Volatility: Yesterday saw a further decline in the VIX to $13.43 (-0.31 | -2.26%), indicating a move towards the lower boundary of its recent uptrending channel, suggesting a momentary easing in market volatility. The VVIX also decreased to 78.54 (-1.96 | -2.43%), while the SKEW index moved in the opposite direction, increasing to 147.29 (+3.69 | +2.57%), hinting at some concerns for outlier events despite the overall volatility decrease. Today's market activity may be influenced by the release of the US GDP numbers, potentially injecting additional volatility. Additionally, Salesforce.com's Q4 earnings announcement after the market close is anticipated to be a significant event for investors. VIX futures remained static after the overnight session at 14.00, with S&P 500 and Nasdaq 100 futures showing minimal movement, reflecting a cautious stance ahead of key economic data and earnings. Tuesday's most traded stock options, in order: TSLA, AAPL, NVDA, MARA, AMD, SOFI, PANW, SOUN, GOOGL, and PLTR.

In the news: Apple cancels work on electric car (to focus on AI), source says (Reuters), EBay Reports Strong Holiday Quarter, Expands Buyback Plan (Bloomberg), Applied Materials receives subpoena from SEC on China shipments (Reuters), Trump could impose universal tariff on Day 1: ex-U.S. trade official (Nikkei Asia), China doubles down on national security, expanding its state secrets law (CNBC)

Macro events (all times are GMT): EC Feb consumer confidence (0900), US 4Q GDP (second) exp unchanged at 3.3% (1230), EIA’s weekly crude oil and fuel stock report (1430). Central bank speakers: Fed’s Bostic (1600), Collins (1615) and Williams (1645), ECB’s Muller (0800)

Earnings events: Focus shifts back to US technology stocks tonight with earnings results from Salesforce and Snowflake after the US market close. Both companies are expected to increase significantly their operating profits as both companies are prioritizing profitability above growth. Snowflake could see an upside surprise to its results and outlook as the company might be benefiting from the AI demand wave.

  • Today: Oversea-Chinese Banking, Holcim, Royal Bank of Canada, TJX, Salesforce, Snowflake, Monster Beverage, Universal Music, Reckitt Benckiser, Moncler, Amadeus IT, Baidu, HP, Pure Storage
  • Thursday: Alimentation Couche-Tard, Anheuser-Busch InBev, CRH, NetEase, Canadian Imperial Bank, Dell Technologies, Autodesk, London Stock Exchange, Argenx, Saint Gobain, Beierdorf, Leonardo, Haleon, Zscaler, Elastic
  • Friday: Canadian Natural Resources, Kuehne + Nagel

For all macro, earnings, and dividend events check Saxo’s calendar

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