Michael McKenna
Head of Editorial Content, Saxo Bank
Risk-on sentiment in equity markets is pushing indices higher with the benchmark US S&P 500 poised for a test of the 2,800 level that has reined in prices for some time now.
"The next week will be critical for US shares," says Saxo Bank Head of Equity Strategy Peter Garnry, with Saxo technical analyst Kim Cramer Larsson cautioning that yesterday's session saw sellers move in with some determination on a prelimary test of this level.
In Europe, Garnry reports that buyers are returning to Italy as the two-year yield retreats and on recent comments from new finance minister Giovanni Tria supporting both the euro and debt-reduction efforts.
"[Tria] sounded very German in his latest remarks – I could easily see Italian shares post a 5% gain from here," says Garnry.
Italian shares ranked according to Saxo's Equity radar model:
Today's key data release will be the US CPI print at 12:30 GMT with the Trump/Kim summit and the British customs union vote also in focus. We also have the latest monthly reports from Opec and the US Energy Information Administration up as oil continues to gyrate.
"We have seen Iraq join Iran and Venezuela in opposing the Russo-Saudi proposal to increase output," reports Saxo Bank Head of Commodity Strategy Ole Hansen, adding that the disagreements are growing more significant as Iraq's oil minister emphasised that oil prices are simply too low for further production rises.
Elsewhere in the commodities complex, Hansen says that gold remains tied to $1,300/oz ahead of the Federal Reserve session (and near-certain rate hike) tomorrow while silver is testing a six-month high against the yellow metal.
Finally, Saxo Bank Head of Forex Strategy John Hardy says that investors should keep an eye on USDJPY as it appears to be pushing for an upside break beyond the 200-day moving average while NOK has headed higher despite a disappointing CPI print.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.