Market Quick Take - June 12, 2020 Market Quick Take - June 12, 2020 Market Quick Take - June 12, 2020

Market Quick Take - June 12, 2020

Macro 3 minutes to read
Steen Jakobsen

Chief Investment Officer

Summary:  Global markets took a steep tumble yesterday during the US session, with Covid19 second wave fears and an FOMC meeting this week that brought nothing new to the table as possible culprits. Elsewhere, oil suffered a weak day in sympathy with equities, and the USD and the JPY rose steeply against most other currencies, as portfolio diversification was hard to come by.


What is our trading focus?

  • US500.I (S&P 500 Index) and USNAS100.I (NASDAQ 100 Index) – the market sold off suddenly and deeply yesterday, erasing more than two weeks of gains, in the case of the S&P 500. The Nasdaq100 faced a slightly less deep rout of not quite –5%, still showing the divergence we have noted recently, as the small cap index was down a stunning –7.5% in yesterday’s session.

  • EU50.I (Euro STOXX 50) - the index hit 200-day moving average three sessions ago and was rejected and is now finding support around the 100-day moving average at around the 3,121 level. If these levels cannot hold the 3,000 level could be next support area to be tested. Europe’s economies are heavily reliant on exports and any increase in uncertainty over a second wave of COVID-19 will hit European equities hard. In addition, sentiment seems to be waning on the France-German joint debt proposal.

  • OILUSJUL20 (WTI Crude Oil) and OILUKAUG20 (Brent Crude oil) - have now firmly moved to the consolidation/correction phase with both benchmarks suffering steep losses on Thursday. The rally, some of it driven by financial speculators, had increasingly been lifting oil to levels that could not be justified fundamentally at this stage in the recovery. Record US crude stocks, a slow recovery in global demand and now the risk of a second Covid-19 wave in the US (before the first one had even peaked) helped drive the across market risk off yesterday. WTI, down 15% from the peak, has reached the first level of support at $35/b with the next being $31.5/b.

  • AMZN:xnas (Amazon) and MSFT:xnas (Microsoft) – interesting chart setups for these two equities with particularly bearish candlestick formations – a huge Evening Star formation in Amazon and something resembling a “Bearish kicking” pattern in Microsoft, just a day after it had burst to a new all-time high.

  • AUDUSD – the AUDUSD sell-off moved in somewhat weak sympathy with the equity market meltdown yesterday-crash yesterday, quickly moving to the top of the 0.6800-0.6750 zone. For FX traders, AUDUSD remains a solid proxy for the equity- and global reflation trades, and if it threatens below first 0.6750, but especially below the key 0.6675 area, that macro narrative would begin to look severely challenged here. Note the “crash risk” discussed below.

  • VOOL:xetr (long VIX future – volatility) - the VIX Index jumped from 27.57 to almost 41 yesterday in its biggest move since 16 March. The VIX futures curve has moved from contango to backwardation and long volatility positions will be in demand today. The 22 level on VIX is generally regarded as the long-term equilibrium point in the VIX term structure. VIX never came back below this level since it broke up above on 24 February so one could ask the question whether we have been in a “bear market” environment the whole time despite the rally.

  • EURUSD – The recent EURUSD turnaround looked technically significant and capable of setting the EURUSD on the road to higher levels. At times yesterday as risk appetite suffered badly, the euro was resilient against the US dollar and certainly resilient against smaller commodity- and EM currencies. But bears got their way and a number of key EU event risks are approaching through next Thursday, so EURUSD may have space to fall to perhaps 1.1175, the first major Fibo retracement before stabilizing (unless next week’s developments prove negative for the single currency). The ultimate support for the late rally is around the 1.1000 level – so critical on the way up.

  • ADBE:xnas (Adobe) - reported FY20 Q2 (endong May 2020) adj. EPS of $2.45 vs est. $2.34 and revenue was almost in line at $3.13bn. Investors pushed shares 4% higher in extended trading taking comfort from the earnings release that the company is shielded from the economic damage although the conference call with management gave a glimpse of uncertainty for the current quarter.

What is going on?

  • US Weekly Jobless Claims in largely as expected. The US Weekly Initial Jobless Claims printed at the expected level near 1.5M, but the Continuing Claims series did no drop as much as expected and were up close to 21M – around the same level as the prior two weeks and not a sign of a V-shaped recovery just yet in the US labor market.

  • Bankrupt Hertz will seek new funds via a share offering - in an unprecedented move that points to the appetite for low quality equity. The bankrupt company will seek up to $1 billion in new equity issuance rather than issuing new senior debt.

  • CORNJUL20, SOYBEANSNOV20 and WHEATJUL20 – Wheat tumbled back below $5/bu following the monthly global agriculture supply-demand report (WASDE). Bigger harvests outside the US will result in record-large world supplies at the end of this crop year. Corn futures rose on concerns over dry U.S. crop weather and after the report pinned stocks forecasts closer to estimates. Soybeans ended close to unchanged as the report sprung no major surprises with the market instead focusing on Chinese demand following the largest US export sales last week in 16 months.

What we are watching next?

  • Market crash risk - yesterday’s sell-off was so sudden and large that it could trigger a widening unease about the quality of the recent market rise, given the enthusiastic participation of novice traders on the way up and signs of speculative froth in low quality equities names. This is not a prediction, but a warning of heightened risk that only goes away if volatility quickly drops back lower.

  • Important EU summit next week - the EU Council meeting next week gives us the next impression on how united the front is on the new EU framework for responding to the Covid19 crisis. Already, pockets of resistance to the EUR 750 billion package are emerging, from Austria to Netherlands, Denmark and Sweden.

Economic Calendar Highlights (times GMT)

  • 0900 – Euro Zone Apr. Industrial Production
  • 1400 – US Jun. Preliminary University of Michigan Sentiment
Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


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 (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


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.