Global Market Quick Take: Europe – 27 June 2024 Global Market Quick Take: Europe – 27 June 2024 Global Market Quick Take: Europe – 27 June 2024

Global Market Quick Take: Europe – 27 June 2024

Macro 3 minutes to read
Saxo Strategy Team

 Key points:


  • Equities: Session in Asia on negative reaction to Micron’s outlook

  • Currencies: Dollar reigns strongly against all except AUD

  • Commodities: Strong dollar weighing on gold, Crude lower after US stock rise

  • Fixed Income: Inflation concerns lead to bond losses despite a solid 5-year U.S. Treasury auction

  • Economic data: EU Confidence & Biden/Trump debate

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

In the news: Micron Q3 results beats estimates on AI-led memory chip demand; guidance in-line (Investing), US regulators could approve spot ether ETFs for launch by July 4, sources say (Investing), Morning Bid: Inflation scares and yen bears (Yahoo), Stocks rise as Tesla, FedEx, and Amazon Provide a Boost (Barron’s), Yen weakens past 160 against the dollar, reigniting intervention speculation (CNBC), Age in focus as Biden faces Trump in first presidential debate (Reuters), 

Equities: Negative session out of Asia with Japanese equities down 0.8% and Hong Kong equities down 1.8% added by a negative reaction to Micron technology results after the US market close. Micron shares were down 8% despite the memory chipmaker reported better-than-expected revenue figures in the previous quarter and indicated higher than estimated revenue figures for the current quarter. AI demand is driving 50% QoQ data centre revenue growth. The market reaction underscores the high expectations for every company that is part of the AI ecosystem. Futures are indicating a flat opening in European and US equities. Today’s key macro event is Tokyo June CPI out tonight expected to show inflation is rising again as we have in several other countries including Australia. That could put more pressure on BoJ to move faster on the policy rate.

Macro: US new home sales plunged 11.3% in May to 619k well beneath the expected 640k, and the prior, which was revised much higher, to 698k from 634k. Wall Street’s biggest banks passed the Fed’s annual stress test, paving the way for higher shareholder payouts. Each of the 31 lenders assessed stayed above its minimum capital requirements during a hypothetical recession, the central bank said. The US central bank’s test found that the aggregate decline in the capital ratios for the 31 banks was 2.8 per cent of risk-weighted assets, up slightly from last year, “but within the range of recent stress tests.” ECB’s Rehn said that he sees bets for two more rate cuts this year as reasonable", with a market terminal rate view of 2.25%-2.5% and did attempt to nullify France's uncertainty with his remarks, "sees no disorderly market moves in France".  Profit for Chinese industrial companies only increased 0.7 per cent from a year earlier in May, decelerating from a 4 per cent gain in the previous month, with Hong Kong stocks slumping to a two-month low on concerns about corporate performance in the world's second largest economy 

Macro events (times in GMT): Sweden’s Riksbank rate decision exp. Unchanged at 3.75% (0730), Turkey’s Central Bank One-week rate decision, exp unchanged at 50% (1100), Eurozone Confidence (Jun), exp services 6.3 vs 6.5, industrial –9.6 vs –9.9 and economic 96.1 vs 96 prior (0900), US Durable Goods Orders (May) exp –0.5% vs 0.6% prior (1230), US Weekly Jobless Claims, exp 2235k vs 238k (1230), US Pending Home Sales (May) exp –4.6% YoY vs –0.8% prior (1400), EIA’s Natural Gas Storage Change, exp. 53 bcf vs 71 bcf prior (1430). US to sell USD 44 bln 7-year Notes (1700), Biden/Trump debate 8pm CT (Midnight GMT)

Earnings events: Today’s key earnings release will be focusing on Walgreens, Nike and H&M


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

  • Friday: Geely Automobile

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

Fixed income: Investors are increasingly worried about inflation, realizing that lower inflation figures do not establish a lasting trend. This concern has been intensified by unexpected inflation rises in Canada and Australia. Upcoming US PCE numbers, along with preliminary CPI figures for June from France, Italy, and Spain, are expected tomorrow (for an analysis of inflation data this week and the likely impact on bond markets, click here). As a result, traders now anticipate central banks will maintain elevated interest rates for longer, reducing the likelihood of rate cuts. Bond futures are now pricing in 43 basis points of rate cuts by December, down from 47 basis points a day earlier. Treasury yields fell by 5 to 8 basis points across the curve in the afternoon. Despite a 5-year auction stopping through the When Issued level, Treasuries continued to lose ground in anticipation of Thursday’s 7-year auction, GDP data, and Friday’s PCE print. Ten-year U.S. Treasury yields rose by 8 basis points to 4.32%, while 2-year yields increased by 5 basis points to 4.74%.

Commodities: Oil prices edged lower on Wednesday after the EIA reported an unexpected rise in US crude stockpiles while implied demand for the three main fuels fell for the first time in two months. Copper traded near a two-month low on China demand doubts and after stocks registered with the world's big three exchanges rose above 500,000 metric tons for the first time since August 2021. Recent PMI reports indicate a bleak manufacturing outlook in major economies, worsened by slowing industrial demand and profits in China. Gold and silver traded lower on Wednesday as the dollar recorded gains against most of its major peers (see below) and after Fed speakers continued to dampen the prospects for rate cuts. Chicago wheat has gone full circle to trade at a 15-week low with US harvest pressure and Russia rains weighing on prices

FX: The US dollar rose to its highest in eight weeks due to higher US yields and month/quarter-end buying, with market focus shifting to the upcoming US presidential debate on CNN. Despite this, AUDUSD resisted the strong dollar pressure, closing nearly unchanged and as the best G10 performer after a surprising May CPI left room for another RBA rate hike. AUD strength is expected to be more pronounced on crosses, with AUDUSD needing a weaker USD to sustain a rally past 0.67. AUDJPY reached record highs at 106.97 and AUDNZD rose above 1.09. USDJPY hit fresh 30+ year highs at 160.87 despite intervention threats. EUR faced pressure ahead of the French elections and from dovish ECB comments, while GBPUSD slipped below its 100-day moving average. The Chinese yuan is in focus as USDCNH rose to 7.30 for the first time since November 2023, impacted by USD strength and JPY weakness.

Volatility: The VIX ended Wednesday at $12.55 (-0.29 | -2.26%). Short-term volatility indicators showed mixed movements, with the VIX1D at $8.69 (+0.53 | +6.50%) and the VIX9D at $10.51 (-0.59 | -5.32%). The rise in the VIX1D is likely due to the upcoming release of the PCE numbers on Friday, one of the Fed's preferred gauges for determining interest rate decisions. The SKEW index, which measures the perceived risk of outlier moves in the S&P 500, dropped to 143.49 (-3.15 | -2.15%), indicating a reduction in perceived tail risk. Today's economic focus, which will influence market volatility, includes Durable Goods Orders, GDP, and Initial Jobless Claims. VIX futures are currently at $13.950 (+0.040 | +0.30%). S&P 500 and Nasdaq 100 futures are showing negative movements: S&P 500 futures are at 5530.75 (-12.75 | -0.23%) and Nasdaq 100 futures are at 19954.25 (-58.25 | -0.29%). Wednesday's top 10 most traded stock options were Nvidia, Tesla, Amazon, Apple, Rivian Automotive, Micron Technology, Advanced Micro Devices, Chipotle Mexican Grill, Microsoft, and Faraday Future Intelligent Electric. 


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