Global Market Quick Take: Europe – March 21, 2023 Global Market Quick Take: Europe – March 21, 2023 Global Market Quick Take: Europe – March 21, 2023

Global Market Quick Take: Europe – March 21, 2023

Macro 8 minutes to read
Saxo Strategy Team

Summary:  Market are putting on a show of increasing calm, but we can hardly expect that the implications of what has unfolded are set to quickly fade after two dramatic weekend interventions to avoid banks triggering a systemic crisis. First up is the FOMC meeting tomorrow and how the Fed positions what is going on and how it guides from here now that the market has already priced in significant rate cuts by year-end. But the Bank of England and Swiss National Bank are also up tomorrow.

What is our trading focus?

US equities (US500.I and USNAS100.I): awaiting the FOMC rate decision

S&P 500 futures rallied 2.2% from the lows after initial nervousness over the AT1 capital market in Europe as Swiss regulators wiped out Credit Suisse AT1 capital holders while leaving money on the table for shareholders. The best performing sector was energy while technology stocks did the worst due to bond yields rising. S&P 500 futures are extending their gain in early trading hours with the 4,000 level being the big gravitational point and colliding with the 200-day moving average. Across markets investors are now awaiting tomorrow’s FOMC rate decision in which the Fed is leaned in markets to hike 25 basis points. Tonight, after the market close Nike will report earnings and provide an outlook on the global consumer.

European equities (EU50.I): confidence is coming back for now

The rescue of Credit Suisse and subsequent reassuring comments from UK and EU regulators that AT1 capital holders are still above shareholders in the capital structure, despite the Swisse regulators broke that order in their Credit Suisse takeover design, lifted sentiment yesterday with STOXX 50 futures rallying 3.7% from intraday lows. The index futures are extending the gains trading above the 4,100 level with the 50-day moving average at around 4,144 is the next potential upside level if momentum continues. Focus is still on banks and real estate related companies.

Hang Seng Index and CSI300 bounced modestly

Selling in the Hong Kong equity market took a pause as battered financial names rallied and the Hang Seng Index gained nearly 1%. HSBC (00005:xhkg) and Standard Chartered (02888:xhkg) gapped higher following rallying overnight in the London session but then traded sideways, up 2% and 1.5% respectively as of writing. Pharmaceuticals and consumer names were top gainers with the benchmark Hang Seng Index. The three leading China telcos consolidated for the second day after a strong performance in March, falling over 1%. In A-shares, CSI300 advanced by around 1%, led by the defense, and tourism stocks. ChatGPT concept stocks were well bid.

FX: USD stabilizes on rebound in yields and ahead of FOMC

The US dollar stabilized after choppy trading and a bout of weakness yesterday as the market mulls the odds for a Fed pause at tomorrow’s FOMC Meeting (preview below), with a rebound in yields and odds for the Fed to go ahead with another rate hike supporting, while at the same time spoiling the Japanese yen’s rally attempt, which can only thrive on lower yields. An important seasonal consideration for JPY traders, by the way is the end of the Japanese financial year at the end of this month and as we await signals from the incoming Bank of Japan Governor Kazuo Ueda as he is set to take the helm in a few weeks. The kiwi was particularly weak overnight as RBNZ expectations have deflated since this latest bout of turmoil started, although less rapidly than RBA forward expectations have. Tonight, NZ reports its Q1 Consumer Confidence survey after the Q4 survey came in at 75.6, the worst ever in the 34-year history of the survey.

Crude oil bouncing but not by enough to force a turnaround in sentiment

Crude oil, down around 12% this month, remains the biggest casualty among key commodities as the banking crisis and risks to the global economic outlook has led to short-term price and demand downgrades. In addition, the technical breakout of long-established ranges has forced major position changes from traders and investors. Hedge funds sold 65k lots of Brent in the week to March 14, and continued selling since then has helped flattening the curve as the market price in lower demand in the months ahead. So far, technical selling and the need to reduce exposure have drowned out signs of robust Chinese demand with Trafigura seeing record demand for some grades. While the attention now turns to the FOMC meeting, Brent and WTI as a minimum would need to close above $75 and $70 respectively before a change in direction can be contemplated.

Gold eased back from the $2000 level with eyes on Fed and AT1 bonds

Gold prices briefly rose above $2,000 on Monday to fresh one-year high of $2010 as the bank lending sector was sent into a tailspin before stabilizing later in the day as regulators rushed to shore up optimism. Before then, gold had reached a record high against the Australian dollar and a near record against the euro, highlighting gold's current ability to attract bids despite pockets of dollar strength. The focus now turns to the FOMC meeting, the most unpredictable in years, with market having gone from hike to cut and back to a hike within the last week. What’s important from a gold perspective is whether a hike will be followed by a signal to pause, if so, it would support market expectations that rate cuts may follow in the coming months. Short-term gold seems overbought, and a correction if gathering pace could see it target $1931, the 0.382 Fibo retracement of the latest run up since March 8. Overall, gold is in an uptrend short- and medium-term and could test all-time highs around $2,074 

Flight to quality bids for Treasuries faded as bank stocks rallied

In Asian hours and the early London session on Monday, investors flocked to the front end of the Treasury curve, seeing the 2-year yield falling to as low as 3.64% as fear arose toward the Additional Tier-1 debts (AT1) issued by banks following the wiping out of over USD17 billion such debts in the takeover deal of Credit Suisse by UBS. The gains in Treasuries faded as stocks, including bank stocks, rallied when New York came in and the Bank of England said that AT1 debts rank ahead of common equity in case of insolvency. The market is pricing in around 18bps, in other words, around a 70% chance for a 25bp hike at the FOMC tomorrow. The 2-year yield finished the Monday session 14bps cheaper at 3.98% while the 10-year yield was up 6bps to 3.48%

What is going on?

US FDIC studies was to insure all deposits in a crisis

Bloomberg reports that US officials are studying ways to temporarily cover all deposits in an emergency, prompted to do such by a coalition of banks. The US Treasury Department will have to determine whether it has the authority to insure all deposits greater than the current cap of $250,000 without Congressional approval, with the latter a likely hefty challenge given the deep partisan divisions. First Republic Bank, widely seen as the most troubled bank of size in the US, saw its shares drop by almost half yesterday despite peers putting together a $30 billion rescue plan for the bank.

EU regulators assure markets of capital structure norms after Credit Suisse

After the AT1 bonds of Credit Suisse were written off in the deal with UBS, EU and UK regulators reassured markets that junior creditors should bear losses only after equity holders have been fully wiped out. But the statement could not provide enough support to Europe’s $275 billion AT1 market. The EU and UK authorities also said they welcomed the comprehensive set of actions taken by the Swiss authorities to ensure stability and that the European banking sector remains resilient, with robust levels of capital and liquidity. Meanwhile, ECB President Lagarde was also on the wires and she continued to reaffirm that the central bank’s inflation fighting mission is separate from the financial sector threats.

Amazon lays off another 9,000 employees

Amazon announced that it is laying off another 9,000 employees, adding to the 18,000 jobs cuts it has announced since the end of last year. The latest job cuts would primarily affect Amazon Web Services, human resources, advertising and the Twitch livestreaming service groups, and comes after a massive hiring spree during the pandemic which left Amazon and other tech companies over-staffed. Amazon is up 16% YTD.

Russia says it will listen to China’s peace proposal. US Secretary of State Blinken responds.

With Chinese leader Xi in Moscow, Russian leader Putin said is open to discussing China’s proposals for “the acute crisis in Ukraine”, but it is a non-starter with Ukraine and its supporters if the proposal simply freezes the current Russian territorial claims. US Secretary of State Blinken positioned China’s overtures as such and said that Xi’s visit is offering Putin “diplomatic cover” as it comes just days after the International Criminal Court issued an arrest warrant for Putin for war crimes. After Xi’s visit in Moscow this week, a video conference between Xi and Ukraine’s president Zelensky is also planned.

Mining titans and traders see copper prices hitting a new record within a year.

Copper has only lost around 3.5% this month which is around 1/3 of the losses seen in crude oil, and it highlights the market focus on a recovering China, low visible stock levels and the continued rise in demand towards electrification.  Trafigura co-head of metals Kostas Bintas joined other senior trading executives at the Financial Times Commodities Global Summit who were uniformly bullish on the outlook for copper, citing constrained supplies and the outlook for rising demand for electrification as part of the green-energy transition.  Mercuria chipped in by saying that the current prices do not reflect the reality of a looming shortage.

What are we watching next?

FOMC meeting tomorrow – to hike or not to hike?

The focus for the upcoming Fed will clearly have to address the current financial stability concerns while pretending to stay on message on inflation considerations. The US Feb. CPI data remained hot, with services inflation still sticky, and Powell's preferred "supercore" metric (which excludes shelter and rent) rose 0.5% month-on-month from 0.36%, the highest since September, so there is plenty of cause for the Fed to continue its hiking regime from the “incoming data” side of the equation. BUt the Fed’s messaging on inflation will be pushed to the side as investors watch for two things: first, simply whether the Fed hikes 25 basis points or stands pat, but second and more importantly, how it positions its level of concern around recent events and the risk of a funding crisis in the banking system and therefore how it guides for the path of rates and QT from here. The market has already marked the Fed to cut more than 75 basis points by year-end after possibly hiking another 25 basis points over the next two meetings (tomorrow’s meeting has a +18 bps probability, i.e., a lean for a hike, but a significant minority is looking for the Fed to blink and not hike rates tomorrow.)

Earnings to watch

Nike reports earnings tonight after the US market close with analysts expecting revenue growth of 6% y/y for the FY23 Q3 (ending 28 Feb) and EBITDA of $1.19bn down from $1.81bn a year ago. Nike continues to be the leader in the sports retailing industry and with a strong result and outlook from Chinese-based Anta Sports (shares were up 7% in Hong Kong trading) we expect Nike to deliver good results.

This week’s earnings releases:

  • Tuesday: RWE, Anta Sports, Partners Group, Nike
  • Wednesday: Tencent, China Telecom
  • Thursday: China Mobile, Accenture, General Mills, Darden Restaurants
  • Friday: China Merchants Bank, Meituan, China Petroleum & Chemical

Economic calendar highlights for today (times GMT)

1000 – Germany Mar. ZEW Survey

1230 – US Philly Fed Business Activity Survey

1230 – ECB's Lagarde, Villeroy to speak

1230 – Canada Feb. CPI

1400 – US Feb. Existing Home Sales

1700 – US 20-year Treasury Auction

2000 – New Zealand Q1 Westpac Consumer Confidence

2030 – API's Weekly Crude and Fuel Stock Report


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.