Market Quick Take - September 29, 2020 Market Quick Take - September 29, 2020 Market Quick Take - September 29, 2020

Market Quick Take - September 29, 2020

John Hardy

Head of FX Strategy

Summary:  Global equities posted one of their strongest days in recent memory yesterday, with the large cap Euro Stoxx 50 index up some 2.75% on the day while the broad US market also posted a strong advance. Signals from US politicians that stimulus talks may be moving forward are one of the immediate triggers for the move. But risk sentiment was not across the board, as a couple of large EM trouble spots remain

What is our trading focus?

  • S&P 500 Index (US500.I) & NASDAQ 100 Index (USNAS100.I) – US equities gained 1.8% in yesterday’s session with technology stocks leading. Momentum is extending this morning pushing S&P 500 futures above the 50-day moving average again. Technically the next major level is 3,400 in S&P 500 and 11,500 in Nasdaq 100. Both could prove tough resistance levels as uncertainty has increased over the economic rebound and the incoming US election on 3 November.

  • STOXX 50 Index (EU50.I) – European equities were up 3.2% yesterday on a strong session driven by gains in financials with banks up more than 5% partly driven by HSBC which got a strong commitment from its largest shareholder Ping An Insurance Group. STOXX 50 futures pushed above the 3,200 level putting it back into the old trading range of 3,200-3,400 with the lower end of the range being important for sentiment.

  • EURUSD and AUDUSD - the US dollar was only slightly weaker yesterday, but it was the first day that the US dollar has posted a decline of note after the recent USD rally began losing momentum late last week. This provides the chance for USD bears to test whether the greenback’s potential has topped out here after AUDUSD took a look close to the key 0.7000 area without breaking lower and EURUSD found support ahead of 1.1600, avoiding the bigger trend test so far toward 1.1500. EURUSD needs to pull up above 1.1800 to suggest that the downside threat has been fully neutralized for now.

  • USDTRY and EURRUB – as noted below, there are some trouble spots in EM that are worth tracking as Turkey’s large and unexpected rate hike last week failed stabilize the lira, while the Ruble has traded  beyond 90 versus the EUR, weaker than during the worst days of the market volatility due to Covid-19 back in March.

  • Spot Gold (XAUUSD) & Spot Silver (XAGUSD) - continue to dance to the tune of the dollar. Yesterday both recovered as the Greenback weakened in response to market hopes for more stimulus announcements in the U.S. and Europe. Following a week of weakness gold found support at $1850/oz with a break above $1900/oz needed to further improve sentiment. Focus today the US presidential debate, stimulus news from Washington and not least the dollar.

  • WTI Crude Oil (OILUSNOV20) & Brent Crude Oil (OILUKNOV20) - reached a one-week high as risk appetite improved on stimulus talk, a good day on Wall Street and the softer dollar. Yet concerns over the pandemic and its impact on global fuel demand has not gone away with renewed lockdown measures seen to combat the virus. Focus on Libya where production is surging, the dollar, weekly US inventory data and first debate between Trump and Biden. Brent currently trades in a relative tight range with resistance being concentrated around $43.5/b where the 50 and 200-day moving averages meet. Downside support at $41.50/b (100-DMA) followed by $39.50/b.

  • HG Copper (COPPERUSDEC20) - has just like other commodities recovered in response the softer dollar. Fundamentals have however weakened during the past week with the tightness easing. The bellwether cash to three-month spread in LME copper has gone from trading $40 over two weeks ago to $13 below yesterday. This after warehouse monitored inventories surged by the biggest volume since May. Potentially developments that may limit the upside and further raise the risk of long liquidation from funds holding the biggest net long in 2½ years. Focus on Chinese PMI Wednesday with a weaker than expected number potentially sending the price lower.

  • European banks (BNK:xpar) - had their best day in months yesterday up 5% driven by HSBC’s confidence boosts from its largest shareholder. The industry is still trading at the lowest price-to-tangible-book values since 2007 eclipsing the lows from the financial crisis underscoring the wounds in the industry. High regulatory costs, low and flat yield curve, weak loan demand and too operating costs are crumbling profits with return on equity at levels not justifying the risk.

  • USDJPY - the USDJPY spent all of last week rising from the Monday lows near 104.00 after the prior week’s sell-off that seemed to point to a significant break lower. The rally has fallen short of fully reversing the prior sell-off and the chief interest here is in relative strength as the JPY and USD have both traded significantly stronger against other currencies.

  • Micron Technology (MU:xnas) - reports FY20 Q4 earnings (ending 31 August) tonight after the US market close. Analysts expect revenue to be up 21% y/y and EPS up by 101% y/y as the memory industry stabilises after some volatile years. The key drivers are strong cloud demand and volume from PCs and new gaming consoles.

  • China Evergrande (03333:xhkg) - shares are reversing their gains from Monday down 5% in Hong Kong trading as the confidence battle continues over one of China’s largest real estate developer. It is still critical to monitor this name as it has potential implications for wider credit market and banks in Hong Kong and mainland China.

What is going on?

  • US House Democrats released new stimulus proposal, with $2.2 trillion as the headline number. The package would include over $400 billion in state- and local government aid, an area that Republicans have resisted as many of the most troubled local governments are Democratic strongholds. The Democratic bill has been put together with active interaction with US Treasury Secretary Mnuchin, who spoke with House Speaker Pelosi late yesterday and will speak with her today as well, according to Pelosi’s spokesman.

  • CDX North America High Yield Index will roll into a new series this week. The index will see 11 additions and removals, which could affect overall spreads of the primary indicator of high yield risk in the US. In the meantime, the US primary corporate market is slowing down as we get closer to the US election.

What we are watching next?

  • Credit and EM trouble spots The Turkish lira and Russian ruble both traded sharply lower yesterday, the former in part on the break out of hostilities between Armenia and Azerbaijan over the disputed Nagorno-Karabakh region (with Turkey supporting Azerbaijan) and Russia perhaps in part on the fears that a Biden win in the US election in November. The Polish (PLN) and Hungarian (HUF) currencies are under notable pressure of late, likely on concerns that inflation has rebounded quickly despite the Covid-19 crisis and is running far beyond local policy rates In credit, US commercial backed mortgage securities are a recent focus as owners of retail- and other properties have been heavily impacted by Covid-19 and forbearance measures can’t continue forever –requiring eventual defaults or restructuring.

  • The first Biden-Trump US Presidential debate tonight. The leak of US President Trump’s tax information looks to have been intentionally timed to provide maximum embarrassment and impact heading into tonight’s Biden-Trump debate. The debates look like the last real chance for US President Trump to shift the polls that have shown a far more stable margin for Biden than Clinton ever enjoyed heading into the 2016 election (where the final weeks saw a dramatic surge in Trump’s favour – perhaps because there appear to be fewer undecided voters this time around as Trump is now a known quantity). If Biden puts in a competent performance and avoids gaffes or weak moments suggesting cognitive difficulties, we may be headed for a strong Democratic win in November, with a taking back of the Senate, which open up for the full impact of Biden’s election platform.

  • Earnings – PepsiCo reports earnings on Thursday providing colour on the state of the consumer across the company’s many businesses and geographies.

Economic Calendar Highlights for today (times GMT)

  • 0900 – Eurozone Sep. Economic Confidence
  • 1200 – Germany Sep. (P) CPI
  • 1315 – Fed's Williams speech at Treasury Market Conference
  • 1400 – US Sep. Consumer Confidence
  • 1400 – BOE's Bailey speech
  • 2350 – Japan Aug. Industrial Production and Retail Sales

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.