Global Market Quick Take: Europe – 29 February 2024 Global Market Quick Take: Europe – 29 February 2024 Global Market Quick Take: Europe – 29 February 2024

Global Market Quick Take: Europe – 29 February 2024

Macro 3 minutes to read
Saxo Strategy Team

Summary:  European and US equity futures are holding steady alongside Asian markets, following a minor decline on Wall Street yesterday. Investors are eagerly awaiting today’s US inflation report, which is expected to offer insights into the potential timing of the first US rate cut. Meanwhile, Bitcoin continues its upward surge, reaching a two-year high driven by robust demand stemming from the recent launch of ETFs. Snowflake slumped over 20% in after-hours trading due to the sudden departure of its CEO and a bleak product revenue forecast. Salesforce initially dropped on a gloomy full-year outlook but later recovered. Treasury markets remain stable after a slight uptick on Wednesday, while the dollar maintains a narrow trading range and gold tests resistance levels in anticipation of the inflation data.


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

Equities: Chinese equity futures are higher in today’s session with Hang Seng futures up 0.7% while US and European equity futures are flat in early trading hours. Earnings are no longer impacting the overall market sentiment and thus the next direction will come from a new change in macro figures. Snowflake and Salesforce reported earnings results after the US market close disappointing investors. Snowflake shares were down 20% on weaker than estimated product revenue outlook and the company announcing a new CEO. Salesforce shares were down 2%

FX: The dollar remains rangebound ahead of US PCE with the EURUSD stuck in a relatively tight range with support around 1.08 with Germany, France and Spain inflation on the radar today along with US PCE. The yen meanwhile strengthened to 149.70 after the BoJ signaled a rate hike is getting closer. 

Commodities: Crude oil is heading for a second, albeit small monthly gain, supported by extended OPEC+ cuts and signs of near-term conditions continuing to tighten with time spreads widening further into backwardation. A bigger-than-expected weekly jump in US crude stocks helped erase earlier gains on Wednesday. Industrial metals trading mixed following the latest setback driven by signals the Chinese construction sector remains weak. Gold trades firm ahead of the US PCE release while cocoa’s recent parabolic rise, amid a big drop in supply from West Africa, show signs of pausing following yesterday’s 7% setback.

Fixed income: US Treasury ended yesterday's day higher ahead of the month-end indexes rebalancing nears. Front-term yields were down up to 5bps, resulting in a steeper yield curve. US GDP Q4 data saw a slight downgrade to +3.2% vs. 3.3%, the first estimate, remaining still well above trend. In the meantime, policymakers continue to push back on expectations of early and aggressive interest rate cuts, with Collins and Williams saying that they will begin cutting rates "later in the year." In Japan, industrial production slumped more than expected, but recent inflation prints show that price pressures are falling slower than expected, reinforcing expectations of monetary policy normalization. As a result, the 2-year Japanese government bond yield is up to 0.18%, the highest level since 2011. Today, the focus is on the PCE deflator, which markets expect the monthly figure to rebound. Overall, the recent bear flattening of the yield curve provides a good entry point to short-term US Treasuries. Still, the long part of the yield curve remains vulnerable to inflation and monetary policy expectations.  On the occasion of Hungary clearing the path for Sweden’s Nato membership, we look at defense bonds here.

Macro: The 2nd estimate of US GDP was revised down to 3.2% from 3.3%, following a mixed report that saw consumer spending at 3% from 2.8% advance estimate and 2.7% expected, while GDP Price Index at 1.6% vs est. 1.5%. Core PCE Price Index at 2.1% vs est. 2%. The small downward revision in headline growth is less of a concern given mixed details and doesn’t change market’s current thinking about the US economy. Fed members continued to warrant caution despite calling for 2024 rate cuts. Bostic (voter) reiterated that he expects the first cut in the summer. Collins (non-voter) suggested the path may be less rapid than past cycles. Williams (voter) said there’s still “a ways to go” to get inflation back to target.

Volatility: Yesterday, the VIX rebounded to $13.84 (+0.41 | +3.05%), finding support at its 50-day moving average, signaling a resurgence in market volatility. The VVIX and SKEW indices followed suit, increasing to 80.36 (+1.82 | +2.32%) and 149.09 (+1.80 | +1.22%) respectively, reflecting concerns over potential market shifts. Today's volatility may escalate with the release of economic data, including the Core PCE Price Index, Initial Jobless Claims, and Chicago PMI. In the earnings arena, Snowflake's after-hours tumble (-20.27%) due to disappointing Q1 forecasts could exert pressure on the broader tech sector. Similarly, Salesforce.com's reported annual revenue fell short of expectations, citing weak cloud demand, potentially influencing market sentiment. VIX futures saw a minor adjustment to 14.200 (-0.025 | -0.16%), with S&P 500 and Nasdaq 100 futures remaining virtually unchanged, indicating a market in contemplation mode. Wednesday's most active stock options were, in order: TSLA, NVDA, AAPL, MARA, BAC, AMZN, GOOGL, COIN, BYND, and AMC, showing some unexpected names making the top 10.

In the news: US Congress leaders reach deal on FY24 spending bills, averting government shutdown (Reuters), Biden’s Doctor Declares Him ‘Fit for Duty’ (WSJ), Supreme Court stalls Trump’s federal election trial while weighing his immunity bid (Politico), Elon Musk Says Long-Delayed Tesla Roadster Coming Next Year (WSJ), The Fed Governor Who Proved Larry Summers Wrong (WSJ)

Macro events (all times are GMT): Germany unemployment change (Feb), exp 5k vs –2k prior (0755),  UK mortgage approvals (Jan) exp 52k vs 50.5k prior (0830), Germany EU harmonized CPI (Feb) exp. 0.6% & 2.7% vs –0.2% & 3.1% prior (1200), US personal income and spending (Jan) exp 0.4% & 0.2% vs 0.3% & 0.7% prior (1230), US Core PCE Deflator (Jan) exp  0.4% & 2.8% vs 0.2% & 2.9% prior (1230), EIAs weekly natural gas storage change (1430)

Earnings events: Key earnings releases for the rest of the week are highlighted below. Anheuser-Busch InBev reported yesterday, reporting results slightly below expectations.

  • Today: 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

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.