Global Market Quick Take: Europe – September 15 2023 Global Market Quick Take: Europe – September 15 2023 Global Market Quick Take: Europe – September 15 2023

Global Market Quick Take: Europe – September 15 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  Risk sentiment got a boost yesterday from ECB’s hint of ‘peak rates’, PBoC’s policy rate cut, and better-than-expected macroeconomic figures in the US and China. In commodities oil prices are hitting fresh highs and iron ore prices are firm on China data. In currencies the CAD and AUD on the back of better growth sentiment. In equities, the Adobe earnings last night came in as expected and Arm shares rose 25% in the first day of trading.


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

Equities: S&P 500 futures are extending recent gains with a potential test of the 4,600 level in sight. Stoxx 50 futures are bouncing back on yesterday’s ‘peak rates’ comments from ECB Lagarde and China’s monetary stimulus. Adobe earnings were in line with expectations sending shares down 2% in aft-mkt trading as generative AI features are still not lifting growth. Arm shares rose 25% on the first day of trading.

FX: The US dollar rose to fresh 6-month highs with EURUSD breaking below 1.07 and the May lows of 1.0635 on yesterday’s ECB rate hike. A close below 1.0635 was still not seen and pair recovered to 1.065 in Asia as upbeat China data boosted growth sentiment. AUDUSD broke above 0.6450 after a hot labour report yesterday and China sentiment at the cusp of a turnaround. CAD was the G10 outperformer as oil prices continued to surge, and EURCAD – as hinted in the FX Watch – slumped below 1.44.

Commodities: Fresh highs in Brent crude this morning trading around the $94.40/brl level as oil market remains tight and demand outlook got a boost from hot US economic data as well as China RRR and better-than-expected industrial output and retail sales in China. Iron ore continued to climb higher breaking above $120, the highest in five months on the back of strong production from China steel mills with a seasonal pickup in construction. Meanwhile, uranium futures are surging higher driven by supply tensions as nuclear reactor capacity growth increases.

Fixed income: The bond market believes the ECB is overtightening the economy, which is the reason the German yield curve bull flattened following yesterday's ECB rate decision. Italian BTPS gained the most as investors believe they will benefit the most from upcoming accommodative monetary policies. Meanwhile, in the US, Treasury yields rise across the yield curve amid higher-than-expected retail sales and PPI retail sales and PPI numbers. Overall, we favour the front part of the yield curve over a long duration. Bonds will gain as the economy starts to show signs of deceleration.

Macro: The ECB raised interest rates 25bp, taking the deposit rate to 4.0%, however the hike was dovish as it came with hints of the end of tightening cycle even though President Lagarde stayed short of saying that ECB is at peak rates. 2023 inflation was upgraded to 5.6% from 5.4%, 2024 (in line with the leaked numbers in Reuters) raised to 3.2% from 3.0% and 2025 lowered to 2.1% from 2.2%, but still ultimately seen just above target. Growth projections for 2023-25 were lowered across the board. US retail sales for August came in firmer than expected although July’s print was revised lower. Headline up 0.6% MoM (exp 0.2%, prev 0.5%) as gasoline station sales surged to 5.2% from 0.1% in July.

In the news: Speculations in the US have surfaced that China’s defence minister Li Shangfy is under investigation as he has not been in public for more than two weeks – full story in the FT. China’s economy shows signs of stability across industrial output and retail sales in August – full story on Bloomberg.

Technical analysis: S&P 500 is at key resistance at 4,540. Nasdaq 100 is at key resistance at 15,561. EURUSD downtrend, testing key support at 1.0635. AUDJPY uptrend after broken resist at 95.00. AUDUSD could move to 0.66. Crude oil uptrend stretched, expect minor correction. Medium-term uptrend strong

Macro events: US Sep Empire Manufacturing est. -10 vs prior –19 (1230 GMT), US Sep P University of Michigan Consumer Sentiment est. 69.0 vs prior 69.5 (1400 GMT).

Earnings events: Adobe reports FY23 Q3 earnings (ending 31 August) after the US market close with analyst expecting revenue growth of 10% y/y and EPS of $3.98 up 63% y/y. Read our earnings preview here.

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

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.