Global Market Quick Take: Europe – September 15 2023 Global Market Quick Take: Europe – September 15 2023 Global Market Quick Take: Europe – September 15 2023

Global Market Quick Take: Europe – September 15 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  Risk sentiment got a boost yesterday from ECB’s hint of ‘peak rates’, PBoC’s policy rate cut, and better-than-expected macroeconomic figures in the US and China. In commodities oil prices are hitting fresh highs and iron ore prices are firm on China data. In currencies the CAD and AUD on the back of better growth sentiment. In equities, the Adobe earnings last night came in as expected and Arm shares rose 25% in the first day of trading.


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

Equities: S&P 500 futures are extending recent gains with a potential test of the 4,600 level in sight. Stoxx 50 futures are bouncing back on yesterday’s ‘peak rates’ comments from ECB Lagarde and China’s monetary stimulus. Adobe earnings were in line with expectations sending shares down 2% in aft-mkt trading as generative AI features are still not lifting growth. Arm shares rose 25% on the first day of trading.

FX: The US dollar rose to fresh 6-month highs with EURUSD breaking below 1.07 and the May lows of 1.0635 on yesterday’s ECB rate hike. A close below 1.0635 was still not seen and pair recovered to 1.065 in Asia as upbeat China data boosted growth sentiment. AUDUSD broke above 0.6450 after a hot labour report yesterday and China sentiment at the cusp of a turnaround. CAD was the G10 outperformer as oil prices continued to surge, and EURCAD – as hinted in the FX Watch – slumped below 1.44.

Commodities: Fresh highs in Brent crude this morning trading around the $94.40/brl level as oil market remains tight and demand outlook got a boost from hot US economic data as well as China RRR and better-than-expected industrial output and retail sales in China. Iron ore continued to climb higher breaking above $120, the highest in five months on the back of strong production from China steel mills with a seasonal pickup in construction. Meanwhile, uranium futures are surging higher driven by supply tensions as nuclear reactor capacity growth increases.

Fixed income: The bond market believes the ECB is overtightening the economy, which is the reason the German yield curve bull flattened following yesterday's ECB rate decision. Italian BTPS gained the most as investors believe they will benefit the most from upcoming accommodative monetary policies. Meanwhile, in the US, Treasury yields rise across the yield curve amid higher-than-expected retail sales and PPI retail sales and PPI numbers. Overall, we favour the front part of the yield curve over a long duration. Bonds will gain as the economy starts to show signs of deceleration.

Macro: The ECB raised interest rates 25bp, taking the deposit rate to 4.0%, however the hike was dovish as it came with hints of the end of tightening cycle even though President Lagarde stayed short of saying that ECB is at peak rates. 2023 inflation was upgraded to 5.6% from 5.4%, 2024 (in line with the leaked numbers in Reuters) raised to 3.2% from 3.0% and 2025 lowered to 2.1% from 2.2%, but still ultimately seen just above target. Growth projections for 2023-25 were lowered across the board. US retail sales for August came in firmer than expected although July’s print was revised lower. Headline up 0.6% MoM (exp 0.2%, prev 0.5%) as gasoline station sales surged to 5.2% from 0.1% in July.

In the news: Speculations in the US have surfaced that China’s defence minister Li Shangfy is under investigation as he has not been in public for more than two weeks – full story in the FT. China’s economy shows signs of stability across industrial output and retail sales in August – full story on Bloomberg.

Technical analysis: S&P 500 is at key resistance at 4,540. Nasdaq 100 is at key resistance at 15,561. EURUSD downtrend, testing key support at 1.0635. AUDJPY uptrend after broken resist at 95.00. AUDUSD could move to 0.66. Crude oil uptrend stretched, expect minor correction. Medium-term uptrend strong

Macro events: US Sep Empire Manufacturing est. -10 vs prior –19 (1230 GMT), US Sep P University of Michigan Consumer Sentiment est. 69.0 vs prior 69.5 (1400 GMT).

Earnings events: Adobe reports FY23 Q3 earnings (ending 31 August) after the US market close with analyst expecting revenue growth of 10% y/y and EPS of $3.98 up 63% y/y. Read our earnings preview here.

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

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.