Global Market Quick Take: Europe – 26 June 2024 Global Market Quick Take: Europe – 26 June 2024 Global Market Quick Take: Europe – 26 June 2024

Global Market Quick Take: Europe – 26 June 2024

Macro 3 minutes to read
Saxo Strategy Team

Key points:

  • Equities:Another strong session in Japan. Nvidia rebounds after rout. Focus on FedEx post strong earnings outlook.

  • Currencies:AUD receives a boost from strong CPI print

  • Commodities:Oil awaits weekly stock report, precious metals lower ahead of US PCE

  • Fixed Income: Inflation remains a focus while the U.S. Treasury prepares to sell 5-year notes.

  • Economic data: US new home sales

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

In the news: Nvidia’s half-a-trillion dollar wipeout leaves global chip stocks volatile (CNBC), FedEx stock surges as profit forecast tops analyst expectations (Investing), Rivian stock surges 36% after announcing $5 billion joint venture with Volkswagen (Investing), Australia's central bank says policy is restrictive, causing households pain (Yahoo), Australia inflation jumps to 6-mth high in May, ramps up rate hike risks (Yahoo), World headed for ‘food wars’ amid geopolitics and climate change, warns Olam (FT).

Equities:Third straight session of strong gains in Japanese equities up 1.4% in today’s Asia session. Futures are indicating European equities 0.6% higher on the open and US equities 0.1% higher. Nvidia will remain in focus today as the AI chipmaker rose 6.8% after three declining sessions taking the shares down 16%. Rivian and Volkswagen will also be in focus today as the German carmaker announces a $5bn investment into Rivian with shares rising 36% yesterday. FedEx shares rose 14% in extended trading as the logistics company reported a better-than-expected FY25 outlook on EPS at $20-22 vs est. $20.85 and announced expectations of buying back own shares worth $2.5bn. The capex outlook for FY25 was also lower than estimated suggesting lower reinvestments are needed to sustain growth which is net positive for shareholder creation.

Macro:US consumer confidence surpassed expectations as it printed 100.4 in June (exp. 100.0), albeit falling from the prior, revised lower, 101.3. Present Situation index rose to 141.5 (prev. 140.8), however the forward-looking Expectations Index dipped to 73.0 from 74.9. Canada's CPI came in hotter-than-expected, leaving the Bank of Canada's July rate cut hanging in the balance. Headline CPI rose +0.6% MoM (exp. 0.3%) and 2.9% YoY (exp. 2.6%) while the core trimmed mean came in at 2.9% YoY from 2.8% previously and expected. Fed Governor Lisa Cooksaid that policy is well positioned to respond to the economic outlook, and at some point, it will be appropriate to cut rates, but the timing will depend on the data. Michelle Bowman stressed the Fed is not yet at the point where it is appropriate to cut rates, noting the baseline outlook continues to be inflation will return to 2% with the policy rate held steady for some time. She said that she does not see 2024 rate cuts. Australia’s inflation accelerated faster than expected for a third straight month in May, sending the AUD higher as traders increased bets that the Reserve Bank will resume raising interest rates at its next meeting. The monthly consumer price indicator climbed 4% from a year earlier, exceeding economists’ estimate of 3.8%, while the trimmed mean core measure, which smooths out volatile items, advanced to 4.4% versus 4.1% a month earlier.

Macro events (times in GMT):US New Home Sales (May) exp 633k vs 634k prior (1400), EIA’s Weekly Crude and Fuel Stock Report (1430), US auction of USD 70 bln 5-year Notes (1700)

Earnings events: Today’s key earnings release is Micron Technology expected to report FY24 Q3 (ending 31 May) revenue growth of 78% YoY and EBITDA of $2.9bn vs $278mn a year ago. The cycle for memory chips has changed with supply having become tighter and pricing is increasing making us to believe that Micron could surprise to the upside against analyst expectations.

 
  • Today: Vantage Towers, Micron Technology, Paychex, General Mills

  • Thursday: Walgreens Boots Alliance, Nike, H&M, McCormisk

  • Friday: Geely Automobile

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

Fixed incomeInflation in Canada unexpectedly rose to 2.9% in May, contrary to the consensus expectation of a drop to 2.6% from 2.7% the previous month. This unexpected increase has reignited concerns that central banks' battle against inflation is far from over, causing bond yields to fluctuate between gains and losses on both sides of the Atlantic. By the end of the day, U.S. Treasury yields were slightly higher across the curve, with 10-year yields closing at 4.24% and 2-year yields at 4.74%. The 2-year U.S. Treasury auction saw strong demand, closing with an increase in indirect bidder participation. German 10-year yields closed relatively unchanged at 2.41%, while French and Italian 10-year yields settled at 3.17% and 3.93%, respectively. Today, the market's attention shifts to the 5-year U.S. Treasury auction.

CommoditiesOil prices fell from an eight-week high on Tuesday with demand concerns in China, where refinery runs according to Goldmans has fallen to a 20-month low, being offset by multiple geopolitical tensions and expectations for strong summer demand elsewhere. Ahead of today’s EIA data, the API reported a weekly stock increase of 0.9mn barrel. Precious metals, meanwhile, traded lower with silver falling back below $29 per ounce due to caution ahead of US inflation data, and continued uncertainty regarding the timing of the first US rate cut. Copper fell to a two-month low and key support, driven by technical selling and long liquidation from funds amid unusually weak Chinese demand.

FXRecent hawkish comments from the Federal Reserve provided a modest boost to the US dollar across various currency pairs. The EURUSD pair tested but did not sustain a break below the 1.07 level due to supportive buying, and uncertainties related to the French elections continue to underpin. The GBPUSD pair remained under pressure, trading below 1.27. In the Japanese yen space, intervention concerns persisted, keeping USDJPY below 160 while both AUDJPY and GBPJPY hit record highs at 106.80 and 202.88 respectively. The AUD rose to a two-week high CPI beat expectations, bolstering the case for the central bank to resume raising interest rates. The USDCAD pair resisted upward momentum and stayed below 1.3680, following an unexpected rise in Canadian inflation, which cast doubt on the likelihood of a rate cut by the Bank of Canada in July.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

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.