Global Market Quick Take: Europe – 9 November 2023

Global Market Quick Take: Europe – 9 November 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  An uneasy calm prevailed during Asian trade after US equities registered the best winning streak in two years as investors digested a flurry of comments from central bank officials to look for signs of whether global interest rates have peaked, with Fed Chair Jerome Powell speaking later today. The yield on US 10-year Treasuries trades back below 4.5%, supported by crude oil collapsing back below $80 for the first time since July amid economic concerns while gold remains in correction mode.


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

Equities: S&P 500 futures closed at the 4,400 level yesterday putting US equities into the recent resistance area from back in October and cyclical sectors, reflecting growth sentiment, have risen to a new high this year against the defensive sectors showing that equity investors remain positive on the economy. This obviously increases the risks in equities should the economy materially slow down over the coming months. On earnings, we got disappointing outlook from Arm causing shares to decline 6%, Disney shares rose in extended trading as the company is on track to more cost savings than analysts expected, and finally Adyen updated its mid-term outlook surprising the market as the company kept a rather high revenue growth outlook with shares rallying 36%.

FX: The dollar trades broadly unchanged against its G10 peers despite the run lower in long-end yields. Fed Chair Powell did not comment on monetary policy, while Cook spoke on risks to the financial system, but focus is again on Powell speaking at the IMF on Thursday where he may try to push back on market’s dovish interpretation of the last FOMC meeting. AUDUSD continued to lose ground and slid lower again to test the 0.64 handle while Yen bears returned, taking USDJPY back higher for a test of 151 and verbal intervention risks escalate at these levels. The EURUSD is pushing back above 1.07 even as Draghi painted the recession picture and GBPUSD attempted a move back above 1.23 after BOE Governor Bailey tried to push back on market pricing for rate cuts after dovish comments from Huw Pill a day ago.

Commodities: Crude oil has moved into a long capitulation phase with Brent trading below $80 and WTI near $75 as front-end curve spreads collapse amid slowing demand, not least in China, the world's top importer. Metals trade mixed with nickel at a two-year low, copper losing ground while iron ore trades near a 7-month high on expectations of support to China’s property sector. Gold’s correction continues with a potential delay in peak rates weighing on prices with focus now on key support around $1935. Ahead of USDA’s supply and demand report today (WASDE), Chicago soybeans hit a two-month high on huge China demand and Brazil weather woes.

Fixed income: yield curves continue to bull-flatten on both sides of the Atlantic. Federal Reserve speakers’ remarks highlight that the fight against inflation is not over, but some recognized that financial conditions are tightened enough. The 10-year US Treasury auction was mediocre as the bid-to-cover was the lowest since June, and it tailed slightly When-Issued. Today the Treasury sells $24 billion 30-year notes and it will be important is demand for ultra-long duration has improved despite the recent drop in long-term yields. While yield curves are now flattening, we remain constructive on steepeners in the mid and long-term.

Volatility: The VIX continues its downwards trajectory ending yesterday’s session at 14.45, -36 cents (-2.43%). The index now had its 8th consecutive day of decline. While it went upwards during the first half of its trading session, it soon reversed its course downwards, sending stocks from their mid-day negative lows to a slight positive at day’s end. With most (if not all) Fed speakers warning that interest rate cuts are not yet here, and we might be in a longer than expected period of high inflation, markets seem to be in denial. With Powell’s speech this afternoon, volatility may rise, and nervousness might return a bit, as it is clear that after 8 days of winning streaks in the stock market, it is losing a bit of momentum. VIX futures are down marginally at $15.970 (-0.47%). S&P 500 & Nasdaq futures are flat, -0.02% and +0.01% respectively. The Cboe SKEW-index (the OTM sibling of the VIX index) ended at 139.41, pointing to a slightly higher chance of outlier moves.

Technical analysis highlights: S&P 500 strong resistance at 4,400. Nasdaq 100 above falling trendline i.e., bullish trend, resistance at 15,561. DAX resistance at 15,280, down downtrend. EURUSD resistance at 1.0765. GBPUSD rejected at 1.2445. USDJPY could test 152.00, strong support at 148.80. EURJPY eyeing 163. Gold correction likely down to 1,933. Brent oil support at 78.20. WTI support at 73.85. US 10-year T-yields key support at 4.50, a close below next is 4.36

Macro: Eurozone October Retail sales -0.3% MoM vs -0.2% expected, though YoY it was at -2.9% vs. -3.1% expected. ECB’s 1yr inflation expectations jumped higher to 4.0% from 3.5% earlier, while 3yr was unchanged at 2.5%. Former ECB chief Mario Draghi said the Eurozone will be in recession by year end, though he pinned the blame for that partly on high energy prices. Final German October CPI unchanged from the preliminary release at 3.8% for the headline and 3.0% for HICP. Philadelphia Fed President Patrick Harker on Wednesday again argued the Federal Reserve should stop raising interest rates and hold them at their current 22-year highs, while warning rate cuts are not forthcoming in the near future.

In the news: China’s Consumer Deflation Returns as Recovery Remains Fragile (Bloomberg), BOJ debated groundwork for future easy-policy exit at Oct meeting (Reuters), Disney Tops Profit Estimates, Seeks Extra $2 Billion in Cost Savings (Bloomberg), Eli Lilly Wins FDA Nod for Obesity Drug That Rivals Wegovy, Ozempic (Bloomberg), Arm forecasts Q3 below Wall Street on deal delay, shares dive 8% (Reuters), Lyft beats third-quarter estimates, bookings underperform rival Uber (Reuters), China Vice President Sees ‘Positive Signals’ in Ties With US (Bloomberg)

Macro events (all times are GMT): US Initial Jobless Claims exp 218k vs 217k prior, USDA’s Oct World Agricultural Supply and Demand Estimates (1700), Fed’s Powell speaks on panel at IMF conference (1900)

Earnings events: Key earnings today from National Australia Bank, Sony, Merck, SoftBank, Honda Motor, AstraZeneca, Brookfield, Deutsche Telekom, and Becton Dickinson.

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

Quarterly Outlook

01 /

  • 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

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

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

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)

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.