Global Market Quick Take: Europe – October 17 2023 Global Market Quick Take: Europe – October 17 2023 Global Market Quick Take: Europe – October 17 2023

Global Market Quick Take: Europe – October 17 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  US and European equity futures trade steady following an overnight rally in Asia in response to yesterday’s strong gains on Wall Street amid increased diplomatic efforts to prevent the Israel-Hamas war from spreading. While the news so far from the Middle East has offered little sign of a breakthrough, bonds, crude oil and gold nevertheless all trade softer following recent strong gains. Aside from geopolitics, traders will be focusing on corporate results this week with Goldman Sachs and Bank of America on tap today, a whole host of US Fed speakers as well as US retail sales.


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

Equities: Wall Street ended the day higher as risk sentiment improved amid efforts from US and its allies to contain the spread of the Middle East conflict. The S&P 500 was up 1.1% while NASDAQ 100 rose 1.2% despite the higher Treasury yields. Most big tech rose, excluding Apple which was under pressure due to worries of weaker iPhone 15 sales in China. Lululemon rose 10% with its expected addition to S&P 500, replacing Activision Blizzard. Earnings today from Goldman Sachs and Bank of America

FX: The dollar was weaker on Monday as it reversed last week’s gains on hopes of a diplomatic push in the Middle East. NZDUSD reversed all of yesterday’s gain as Q3 CPI came in below expectations and dropped back below 0.59 as we wrote in our FX note yesterday – test of YTD low at 0.5859 likely. AUDUSD traded above 0.6340 and EURUSD rose above 1.0550. USDJPY still stuck around 149.50 despite a jump higher in yields, with 150 serving as a clear intervention threat area.

Commodities: Brent crude trades back below $90 as fears of an escalation in the Israeli-Palestinian conflict eased while the prospect of a US deal with a Venezuela could see rising exports as sanctions are eased. Gold’s short-covering rally ran out of steam amid a renewed rise in US Treasury yields while base metals suffered further setback amid concerns about the global demand outlook. HG Copper is currently challenging key support in the $3.55 area.

Fixed Income: yield curves bear steepened yesterday on both sides of the Atlantic as markets were unwinding safe haven demand from Friday. The focus turns today on US retail sales, the 20-year US Treasury auction on Wednesday and Powell’s speech on Thursday. Yet, wages and CPI numbers in the UK will also be in focus together with China’s GDP and Japan’s inflation data. Following last week’s US Treasury auctions we remain concerned about demand, especially in light of this week’s 20-year bond sale, a tenor normally not liked by investors. As long-term  Treasuries yields remain in an uptrend we remain cautious favouring quality and the short part of the yield curve.

Macro: US Empire State manufacturing index fell less than expected in October to -4.6 from 1.9 prior and -6.0 expected. New orders and shipments dropped to -4.2 (prev. +5.1) and +1.4 (prev. +12.4), respectively.

Fed’s Harker said a ‘resolute, but patient’ stance is appropriate, and that the Fed can hold rates steady absent a sharp turn in the data. Goolsbee told the FT that improving inflation was a trend not a blip.

NZ CPI came below expectations. Q3 CPI came in at 5.6% YoY, down from 6.0% YoY prior and 5.9% expected. This was also lower than RBNZ’s projection of 6.0%. Falling inflation could provide comfort to RBNZ, and the probability of another rate hike by the end of the year dropped from over 30% to 10%.

Technical analysis highlights: S&P 500 strong resistance at 4,400. Nasdaq 100 rejected at resistance at 15,245, downtrend could resume. DAX back below key support at, bearish. EURUSD rejected at resistance at 1.0635 expect range trading. USDJPY uptrend intact. Gold rejected at falling trendline. Copper testing key support at 354.50. WTI Crude oil rejected at 88.20 resistance. US 10-year yields resuming uptrend 5% in sight

In the news: Biden to visit Israel as Gaza war sparks humanitarian crisis (Reuters), Putin visits 'dear friend' Xi in show of no-limits partnership (Reuters), Diplomats renew calls for Gaza aid; Iran warns Israel (Reuters), Country Garden Enters Final Hours to Avoid First Bond Default (Bloomberg), Ford chair warns extended strike will boost Tesla, Toyota and China (FT), Netflix may hike prices after success of password-sharing crackdown (Reuters)

Macro events (all times are GMT): German ZEW Survey (Oct) exp –9 vs –11.4 prior (0900), US Retail Sales (Sep) exp 0.3% vs 0.6% prior (1230), Can CPI (Sep) exp 0.1% & 4% vs 0.4% & 4% prior (1230), US Industrial Production (Sep) exp 0% vs 0.4% prior (1315), API’s Weekly Crude and Fuel Stock report (2030)

Central bankers speaking (all times are GMT): BOE’s Swati Dhingra (0905), ECB’s Knot (1300), Fed’s Bowman (1320), ECB’s Centeno (1400), Fed’s Barkin (1445), ECB’s Guindos & Holzmann (1700). Note the Fed blackout period ahead of the November 1 meeting starts on October 21.

Earnings events: Goldman Sachs, Bank of America, Johnson & Johnson

For all macro, earnings, and dividend events check Saxo’s calendar and Peter Garnry’s earnings update here

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/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

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. Android is a trademark of Google Inc.

©   since 1992