Global Market Quick Take: Europe – 18 March 2024

Global Market Quick Take: Europe – 18 March 2024

Macro 3 minutes to read
Saxo Strategy Team

Summary:  European and US equity futures trade higher following Friday’s selloff in equities and bonds when markets rounded off a week that saw hot inflation concerns roiled markets ahead of key event risks from Fed and BOJ meetings this week. The improved sentiment into Monday’s session being led by a +2% gain in the Nikkei with BoJ watchers expecting the BoJ will scrap its negative-rate policy at tomorrow’s meeting. On Friday, Adobe tumbled 14% as outlook fell short of expectations, and tech focus will be turning to the Nvidia GTC conference this week where new flagship chips are expected to be launched. In commodities, the focus is on metals after copper reached an 11-month high, and fresh oil market strength, supported by supply risks and surprisingly strong economic data from China.


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

Equities: Japanese equities were the big move in Asia on Monday with Nikkei 225 futures up 3% as the JPY continues to weaken ahead of the BOJ rate decision tomorrow night with consensus still predicting no change but the market chatter increasingly getting louder that the central bank could hike. Other key events this week are FOMC on Wednesday, with no change expected given the latest economic data, and Nvidia’s GTC AI conference running over the coming three days which could ignite more momentum in AI related stocks. Thursday is the big day in terms of earnings with US earnings from Nike, FedEx, Lululemon, and Accenture. Important Chinese earnings releases are also on tap from Xiaomi, PDD, Tencent, and Meituan. In single stocks the big news this morning is talks between Apple and Google to let Google’s generative AI system Gemini power AI features on the iPhone.

FX: Dollar is starting the week on the front foot with a host of central bank meetings ahead, but primary focus is on the Fed and the BOJ. DXY index trades near 103.50 while USDJPY is back above 149 signaling that a BOJ rate hike is fully priced in and any dovish commentary this week from the BOJ or a hawkish outcome from the Fed could easily put the focus above 150. The EURUSD is holding up better despite a stronger dollar, trading just below 1.09 even as ECB signals on a June rate cut continue to get clearer. AUDUSD drifted back below 0.66 last week although some support came through from a modest recovery in China’s activity data out today, and eyes turn to whether the RBA can maintain its hawkish bias tomorrow. For more on our FX view, read our weekly FX commentary here.

Commodities: Green metals remain in focus with copper up 6% last week although Iron ore slipped below the key $100-mark amid China’s property sector concerns. Gold softened slightly last week after touching highs of close to $2,200 earlier as hot inflation concerns returned, but silver gained on the back of price action in copper and touched fresh YTD highs of $25.44 last week. Crude oil trades higher, building on last week’s gains after the IEA raised its global oil demand forecast and with added support today from stronger than expected China data and another round of Ukraine drone attacks on Russian energy plants underpinning diesel prices. For more on commodities, read our weekly commentary here.

Fixed income: Sovereign bonds on both sides of the Atlantic ended last week lower as bond futures price out interest rate cuts for this year. In Europe, traders bet on 85bps rate cuts for 2024, 20bps down in just a week. In the US, traders are expecting less than 75bps rate cuts throughout the year. This week, the focus will be on the Eurozone CPI and the Bank of Japan today and tomorrow, the Federal Reserve on Wednesday, and the Bank of England on Thursday. We expect the Fed to hold rates but revise economic projections for growth and inflation up for 2024. At the same time, the dot plot might show dispersion, indicating that policymakers are more divided regarding how many interest rate cuts should be delivered this year. As the US economy remains resilient and inflation is far from the 2%  Fed inflation target, the US yield curve may continue to bear-steepen. If the 10-year US Treasury yield breaks above 4.35%, it will find resistance next around 4.47%.

Macro: Japan’s largest federation of labor unions, Rengo, secured wage increases of 5.28% for the coming fiscal year, a figure that far outpaces the initial 3.8% tally from a year ago — itself the biggest in 30 years. Base pay deals averaged 3.7% in the first tally of results, compared with 2.33% a year earlier, it added. While wage hikes may be key for the Bank of Japan meeting this week, where signals have been pointing towards a rate hike, but traders have a lot to consider this week including a potential hawkish update from the Fed, as discussed in this article.  RBA Preview: The Reserve Bank of Australia will announce its next rate decision on Tuesday this week. While it is expected to stay on hold and may be off the global radar amid focus on Fed, BOJ and potentially the SNB, there is a slight chance for the RBA to ease its hawkish tone seen at the last meeting. Surprisingly strong data from China: While retail sales slightly missed expectations, coming in at 5.5% compared to a 5.6% forecast, industrial production and fixed assets surprised to the upside. While the data may be brushed aside due to Lunar New Year distortions, it looks like a subdued recovery persists

Technical analysis highlights: S&P 500 & Nasdaq 100 Bearish Engulfing top and reversal pattern. Key support for S&P 500 5,057. Nasdaq 100 closed Friday bang on key support at 17,808, next support at 17,478. DAX uptrend intact, key support at 17,620. Below expect sell-off to 17,326-17,118.
 EURUSD correction support at 1.0870 and 1.0830. USDJPY testing strong resistance at 149.20. EURJPY resumed uptrend could test previous peak at 163.70. GBPUSD correction, support at 1.27, expect rebound from there. AUDJPY range bound 96.80- 98.20.  Gold correction unfolding likely to test support at 2,134, possibly 2,115. Silver broken resistance at 24.60 potential to 26.00. WTI oil confirmed uptrend, resist at 82.56. 

Volatility: On Friday, the VIX closed nearly flat at $14.41 (+0.01 | +0.07. The VVIX saw an increase to 92.17 (+3.42 | +3.85%), indicating rising volatility expectations, while the SKEW index decreased to 138.91 (-5.04 | -3.50%), suggesting a slight easing in concerns over outlier market movements. The anticipation for this week centers around the FOMC's interest rate decision, which is expected to introduce significant volatility, particularly in light of recent CPI data exceeding forecasts. The market's attention will also be on any hints from the Fed regarding future interest rate directions. This sentiment is reflected in this week's expected moves, which are higher than last week's, with the SPX at +/- 76.58 (+/- 1.50%) and the NDX at +/- 386.10 (+/- 2.17%). As the earnings season nears its end, Micron, Nike, Lululemon, and Darden Restaurants are among the few significant names left to report their Q4 results. VIX futures are slightly down this morning at 15.540 (-0.14 | -0.88%). S&P 500 and Nasdaq 100 futures have started the week on a positive note, up at 5198.00 (+15.25 | +0.28%) and 18159.00 (+100.25 | +0.56%) respectively. Friday's trading saw the most activity in options for TSLA, NVDA, AAPL, AMD, MSFT, AMZN, PLTR, META, MARA, and GOOGL.

In the news: Adobe shares slip 10% on soft sales forecast (CNBC), TSMC considering advanced chip packaging capacity in Japan, sources say (Reuters), Xpeng to launch cheaper EV brand amid fierce China price competition (Reuters), China kicks off the year on strong note as retail, industrial data tops expectations (CNBC), Oil prices build on last week's gains as supply risks rise (Reuters)

Macro events (all times are GMT): Nothing of note today with focus on Tuesday’s rate decision from RBA (0230) and BOJ ahead of the European opening.

Earnings events: Interesting week ahead with key Chinese technology and consumer earnings from Xiaomi, Tencent, PDD, and Meituan. For developed markets the big earnings day is on Thursday with earnings releases from Nike, FedEx, Lululemon, and Accenture.

  • Monday: Wanhua Chemical Group, BNP Paribas Fortis, Hannover Re
  • Tuesday: Xiaomi, China Unicom Hong Kong, Partners Group
  • Wednesday: Tencent, Prudential, Micron Technology, Alimentation Couche-Tard, Kuaishou Technology, PDD, General Mills, BioNTech
  • Thursday: China Mobile, CNOOC, Ping An Insurance Group, Enel, China CITIC Bank, BMW, Nike, FedEx, Lululemon Atheletica, Accenture, Next, Darden Restaurants, FactSet
  • Friday: China Shenhua Energy, Meituan, Zijin Mining Group, Yihai Kerry Arawana, CMOC Group, China Petroleum & Chemical
For all macro, earnings, and dividend events check Saxo’s calendar

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

The information on or via the website is provided to you by Saxo Bank (Switzerland) Ltd. (“Saxo Bank”) for educational and information purposes only. The information should not be construed as an offer or recommendation to enter into any transaction or any particular service, nor should the contents be construed as advice of any other kind, for example of a tax or legal nature.

All trading carries risk. Loses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money.

Saxo Bank does not guarantee the accuracy, completeness, or usefulness of any information provided and shall not be responsible for any errors or omissions or for any losses or damages resulting from the use of such information.

The content of this website represents marketing material and is not the result of financial analysis or research. It has therefore has not been prepared in accordance with directives designed to promote the independence of financial/investment research and is not subject to any prohibition on dealing ahead of the dissemination of financial/investment research.

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.