Head of FX Strategy
Key points:
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Please note that there will be no Quick Take (Asia) published on 1 May 2024. We will resume the publication on 2 May 2024.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
Equities: US equities closed higher as tech stocks were buoyed by a rally in Tesla shares that jumped 15% on CEO Musk’s quick trip to China and getting approval for its automated driving system. Apple also rallied on a bullish analyst call. Meanwhile, risk sentiment was supported by peace talks between Israel and Hamas, but focus shifts to FOMC meeting and whether Chair Powell will make a hawkish pivot that could mean risk aversion comes in play. Earnings calendar is still heavy, with Amazon, AMD, Coca-Cola and others on tap today. Our Weekly Earnings preview discusses expectations around some of these key stocks.
Japan stocks opened over 1% higher after the holiday, amid volatility in the yen. Hong Kong’s Hang Seng Index extended its rally on improving sentiment on tech and property sectors. China’s largest EV maker BYD missed Q1 revenue expectations on price cuts, and stock is nearly unchanged YTD after recovering from a sharp slump in January.
FX: A volatile day in FX markets with attention on JPY. USDJPY saw a quick surge to 160 earlier in thin liquidity with Japan markets on holiday. However, in what seemed like an official intervention, USDJPY dropped all the way to 155. Authorities have stayed away from confirming whether it was an intervention, but the fact that the move came after pair touched the key 160 handle, which we had highlighted as the threshold for intervention earlier, and the extent of the move suggests that authorities had a hand. USDJPY has partially faded the move, and it trades back above 156 now, but risk of another round of intervention remains if MOF/BOJ want to push out speculators further while structural weakness for the yen remains. Back in 2022 as well, Japanese authorities intervened on two consecutive days.
Focus is also shifting to the FOMC meeting and the high bar for Chair Powell to surprise hawkish. AUDUSD was rejected at 0.6585 and a dovish Fed could bring another attempt. NZDUSD ran into fibo retracement at 0.5974. EURUSD was mostly sideways despite higher inflation prints in Germany and Spain and focus turns to EZ GDP and inflation due today. Momentum in GBPUSD continues, as it rose to 1.2560+ amid sustained equity momentum. To read more on our weekly FX views, go to this Weekly FX Chartbook.
Commodities: Crude oil prices retreated amid signs of progress towards a ceasefire between Israel and Hamas. This may erase some geopolitical premium, but focus still also on attacks on energy infrastructure in Russia/Ukraine. Focus may shift to macro dynamics in the next few days with FOMC meeting due, and demand outlook will be key. Meanwhile, copper prices continued their ascent to reach fresh highs with Codelco, Chile’s state-owned miner, reporting a decline in quarterly output at its aging mines. Gold is sideways and focus is on whether Chair Powell makes a hawkish pivot.
Fixed income: Treasuries ended the day in gains but the latest financing estimates from the Treasury came in above analyst expectations ahead of the QRA on Wednesday. The US Treasury expects to borrow USD 847bln in Jul-Sep, assumes end-Sep cash balance of USD 850bln. Expects to borrow USD 243bln in Apr-Jun (+41bln vs estimate in Jan), assumes end-Jun cash balance at USD 750bln. QRA and FOMC are the next big focus, read this bond market week ahead to know more.
Macro:
Macro events:
Earnings:
News:
For all macro, earnings, and dividend events check Saxo’s calendar.
For a global look at markets – go to Inspiration.
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.
