Global Market Quick Take: Europe – April 17, 2023 Global Market Quick Take: Europe – April 17, 2023 Global Market Quick Take: Europe – April 17, 2023

Global Market Quick Take: Europe – April 17, 2023

Macro 7 minutes to read
Saxo Strategy Team

Summary:  US equities ended last week largely flat as three of the largest banks reported earnings and kicked off the Q1 quarterly earning cycle. Developments elsewhere deserved a bit more attention as hawkish Fed comments drove a sharpy rise in treasury yields and inspired a sharp reversal in the US dollar’s fortunes, with gold also selling off on the development just after having probed new cycle highs.

What is our trading focus?

US equities (US500.I and USNAS100.I) chop to end day and week flat

US equity market saw a choppy session Friday but ended the day and week largely unchanged as earnings season gets into full swing this week (see long list of important companies set to report earnings this week below). Technically, the S&P 500 action has been bottled up ahead of the 4,200+ resistance and the Nasdaq 100 has been unable to capitalize and extend its momentum higher after break back above 13,000 more than two weeks ago, with the bounceback in US Treasury yields on Friday offering some headwinds for bulls if that move extends.

Chinese equities (HK50.I & 02846:xhkg): rally ahead of key data tomorrow

Hang Seng Index and CSI300 Index both advanced, rising 0.6 to 1%. Resources names surged. Base metal miner MMG (01208:xhkg) jumped more than 12% and Petrol China (00857:xhkg) added 4.3%. EV maker XPeng (09868:xhkg) soared 10% on plans to cut costs. China is releasing Q1 GDP and fixed asset investment, as well as March retail sales and industrial production tomorrow. The data is expected to show an acceleration in growth, partly attributable to the base effect following strict lockdowns that began in major cities in March last year. Economists surveyed by Bloomberg anticipate China's Q1 real GDP growth to recover to 3.9% Y/Y, up from 2.9% Y/Y in Q4.

FX: EUR and GBP back below key levels

After a tough week, the USD recovered sharply on Friday into the close, bouncing higher as Treasury yields rose on the back of retail sales data and a University of Michigan survey signalling Fed could keep rates higher for longer on the jump in short term inflation expectations (more below). The Fed’s Waller comments also brought back fear of more rate hikes, seeing EURUSD drop back below 1.10 and GBPUSD below 1.25 and testing 1.24 in today’s session – both just after testing cycle highs. USDJPY also rose back higher to test the 134 handle from lows of 132 during the week. NZDUSD is testing range lows just above the 200-day moving average, while AUDNZD surged back above 1.08 for the first time since early February ahead of Q1 NZ CPI data due on Wednesday.

Crude oil: IEA warns about higher prices while diesel sends the opposite message

Crude oil continues to trade in a relatively tight range following the early April mayhem when prices surged higher after OPEC+ announced their surprise production cuts. Since then, both WTI and Brent have traded rangebound with a brief upside attempt quickly running out of steam last week. In their monthly oil market report last Friday, the IEA warned that the OPEC+ cut will tighten the market more than previously expected and lead to further price increases. On the other hand, the risk of continued US rate hikes and weakening refinery margins signaling weaker demand, especially for diesel fuel, the heavy machinery fuel that powers everything from trucks to construction equipment, is a concern that could keep Brent below $90 in the coming weeks until the demand outlook becomes clearer.

Gold drops back towards $2000, silver below $25.50 on Fed warning

Higher yields and a stronger dollar into the close on Friday saw gold trade lower following a week that saw the yellow metal move within 1% of the 2022 record high. A combination of a Mich. survey pointing to higher inflation for longer and warnings from Waller (see below) that the Fed has not made much progress on its inflation goal, and rates need to rise further, saw gold slump from $2040 to sub-2000 before stabilizing. Silver also plummeted from $26 to lows of $25.15 with support at the 25-handle still holding. Having gone through a mini correction after reaching overbought territory the metals will be focusing on this week’s PMI data as key along with a host of Fed speakers. Gold will need to stay above the 21-day moving average, currently at $1989, to maintain its upward trajectory, and avoid a bigger setback towards $1955.

Treasuries (TLT:xnas, IEF:xnas, SHY:xnas): yields rose on hawkish Fed comments.

US Treasury yields climbed higher on Friday, driven by hawkish remarks from Federal Reserve official Christopher Waller, who is a voting member on the Board of Governors and said that inflation is too high and that his job is not done. The market is now pricing higher odds of a May 3 FOMC meeting rate hike and a full 25 basis point hike through the June meeting is now fully priced. Later in the day on Friday, the University of Michigan consumer survey, 12-month inflation expectations surged to 4.6% in March from 3.6% in February. This uptick raised concerns over inflation and weighed on the shorter-term end of the Treasury curve, with the 2-year yield surging 13bps to 4.10%. The 10-year yield increased by 7bps to 3.51%.

What is going on?

Merck to buy Prometheus Biosciences at 75% premium to Friday’s close.

The US-based pharmaceutical company Merck is attempting to acquire Prometheus in a deal worth $10.8bn and expects the deal to close in Q3 this year. Prometheus is a biotechnology company treating different types of immune-mediated diseases with a focus on inflammatory bowel disease. In other news, Merck announced a very successful set of data points related to its skin cancer vaccine treatment which it is developing in a partnership with Moderna.

Flash April University of Michigan survey sees jump in inflation expectations

Preliminary print UoM for April saw the headline rise to 63.5 (exp. 62.0, prev. 62.0) reflected by current conditions and forward-looking expectations both lifting more-than-anticipated to 68.6 (exp. 67.3, prev. 66.3) and 60.3 (exp. 60.0, prev. 59.2), respectively. Meanwhile, inflation expectations jumped sharply higher, with 1yr expectations coming in at 4.6% from 3.6% previously while long-term 5yr expectations remained at 2.9%. This is probably a signal of higher gasoline prices at the pump, and continues to signal that it may be too soon to take inflation concerns off the table.

Fed speakers further send USD higher

A host of Fed speakers were on the wires on Friday. Specifically, Waller’s (voter) comments were particularly hawkish, as he noted the recent data shows Fed has not made much progress on its inflation goal, and rates need to rise further. He also said that policy needs to remain tight for a substantial period and longer than what markets are expecting. Bostic (non-voter) also supported the case for a May rate hike, saying that the recent inflation data is encouraging, though prices are still rising too fast and the Fed needs to do more. Dovish member Goolsbee (voter) repeated his comments from earlier in the week, noting he does not want to comment on what he will be voting for in May as he still wants to see the data, but repeated the need to be mindful as Fed has already hiked a lot and there is some lag possibly coming through and possibly evident in the weak March retail sales. With data flow remaining thin this week, focus will be on a host of Fed speakers to assess the path of interest rates from here.

US retail sales mixed, but garners a strong reaction from bonds and USD

Headline retail sales fell 1.0% in March, deeper than the expected decline of 0.4% and the prior -0.2% (revised up from -0.4%). Core Retail sales were also weak, falling 0.8% vs the -0.3% consensus and against a prior -0.1%. However, the retail control group, an input into the consumer spending section of GDP, declined by 0.3%, coming in better than the Bloomberg consensus expectation of -0.5%. The March industrial production also came in better-than-expected at 0.4% MoM vs. +0.2% expected, further boosting short-end yields. In the wake of the data and Fed speakers, US treasury yields and the US dollar surged.

COT on commodities in the week to April 11

In the reporting week, the Bloomberg Commodity Index added 0.6% to trade higher for a third week as continued gains in energy, led by gasoline and natural gas, and broad gains in softs led by sugar and coffee more than offset consolidating among precious and industrial metals as well as grains. Responding to these developments, and according to the weekly Commitments of Traders report, money managers increased their net long across 24 major commodity futures contracts by just 2% to 1.2 million lots, a seven-week high, with buying being concentrated in WTI crude oil, RBOB gasoline, natural gas, coffee and cattle. On the sell side some profit taking emerged in gold, platinum, soybeans while the CBOT wheat short reached a fresh five-year high.

What are we watching next?

Regional US banks reporting earnings will be in focus this week.

Regional US banks are not normally in focus in any given earnings season, but they are suddenly in the spotlight for this earnings cycle since the sudden March collapse of Silicon Valley Bank and ensuing signs that some depositors are moving their funds to larger banks, or even into US treasuries, given the unprecedented pace of declines in US commercial bank deposits in recent weeks. Some of the larger US regional banks reporting this week include M&T Bank reporting today, Zions Bancorp and US Bancorp reporting Wednesday, and Bank OZK, Comerica, Fifth Third, KeyCorp and Truist reporting on Thursday.

Earnings to watch

The Q1 earnings season is taken to a new level this week with very important earnings releases from Netflix on Tuesday and ASML and Tesla on Wednesday. In relation to the banking crisis earnings from Charles Schwab today and later this week on Wednesday from US Bancorp are key to watch – but note as well some of the regional bank names set to report this week above as well as the list below.

  • Monday: Eve Energy, Exor, Charles Schwab
  • Tuesday: Ericsson, Johnson & Johnson, Bank of America, Netflix, Lockheed Martin, Goldman Sachs, Intuitive Surgical
  • Wednesday: Metro, ASML, Heineken, Tesla, Abbott Laboratories, Morgan Stanley, IBM, Lam Research, US Bancorp
  • Thursday: CATL, Tryg, Nokia, Sartorius, Volvo, Philip Morris, AT&T, Union Pacific, American Express, Blackstone, CSX, DR Horton
  • Friday: Jinko Solar, SAP, Sandvik, Investor, Procter & Gamble, Schlumberger, Freeport-McMoRan

For an extended overview of all earnings releases check out the earnings calendar in our trading platform.

Economic calendar highlights for today (times GMT)

1200 – Poland Mar. CPI Core
1230 – US Apr. Empire Manufacturing
1300 – UK Bank of England’s Cunliffe to speak
1400 – US Apr. NAHB Housing Market Index
1500 – ECB President Lagarde to speak
0200 – China Q1 GDP
0200 – China Mar. Industrial Production
0200 – China Mar. Retail Sales


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

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 (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

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

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

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.