Global Market Quick Take: Europe – September 19 2023

Global Market Quick Take: Europe – September 19 2023

Macro 3 minutes to read
Saxo Be Invested
Saxo Strategy Team

Summary:  Choppy trading session ahead of the key central bank decisions due in the week ahead with traders worrying they will stay hawkish as inflation remains a threat, not least from the continued rise in energy prices with Brent trading above $95/brl. ECB officials were a touch hawkish, and EURUSD made its way back closer to 1.07 while the US yield curve flattened as 2-yr reached further above 5%.


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

Equities: An undecided equity session yesterday with the market clearly in a wait-and-see mode ahead of central bank decisions from the Fed (Wednesday), BoE (Thursday), and BoJ (Friday). Equity futures are slightly flat today with only Nikkei 225 making a big move down 1% rejecting the key resistance levels for this cycle. The US 10-year yield is still worth tracking for potential downside catalyst in equities should it break higher again. We also note the initial weakness in Nvidia shares yesterday before they recovered.

FX: EUR saw a recovery towards 1.07 amid some hawkish rhetoric from ECB speakers pushing the higher-for-longer narrative. NZDUSD pushed higher from Monday’s lows of 0.5895 and CAD remains strong supported by rising oil prices with USDCAD below 1.35 and 200DMA at 1.3464 is coming into view.  USDCNH trades above 7.30 and back above its 21-DMA as bullish yuan momentum fades again

Commodities: Brent trades above $95 as the bullish momentum continues to be supported by a tightening supply outlook, especially for diesel amid lack of diesel-rich Middle East and Russian crudes. The crude market is heavily overbought and in need of consolidation but with prompt spreads in WTI and Brent both pushing towards $1.5 the tightness looks increasingly extreme. Gold holds above $1930 ahead of Wednesday FOMC meeting while grain prices continue to tumble amid strong dollar and harvest pressure, especially for soybeans.

Fixed income: With some concerns arising about the rise in crude oil prices, trading in the Treasury market remained calm in anticipation of the FOMC decisions on Wednesday. The yield curve flattened with the 2-year yield rising 2bp to 5.05%, while the 10-year yield dropped by 3bps, settling at 4.30%.

Volatility: The VIX Index remains around the low 14 level while the US options market yesterday expressed a negative skew on Arm shares with put-to-call volume at 2-to-1. On the bullish side Mattel attracted significant buying of call options yesterday.

Macro: ECB Vice President Luis de Guindos said that underlying inflation should continue to moderate, while Governing Council member Peter Kazimir implied that September’s interest-rate increase may be the final one of the cycle. ECB Villeroy said the ECB will keep interest rates at 4% for as long as needed to tame inflation, suggesting no further rate hikes but staying consistent with the higher-for-longer message.

In the news: Instacart shares are priced at the high end of the IPO price range at $30 per share with first day of trading in today’s session – full story in the FT. Brent crude hits $95/brl as OPEC vows to stabilise market – full story on Bloomberg.

Technical analysis: S&P 500 at key resistance at 4,540. Nasdaq 100 at key resistance at 15,561. Both equity indices look bearish. European Equity Indices bearish across the board. EURUSD likely to bounce from strong support at 1.0635. USDJPY range bound 146-148. AUDJPY uptrend after broken resist at 95.00. WTI resistance at 93.48. US 10-year yields eyeing 4.48. Gold range bound 1,900-1,950   

Macro events: Eurozone Aug CPI exp. 5.3% YoY vs 5.3% prior (0900 GMT), US Aug Housing Starts exp. -0.9% vs 3.9% prior (1230 GMT), US Aug Building Permits exp 1440k vs 1442k prior (1230 GMT), Canada Aug CPI exp 3.8% YoY vs 3.3% prior (1230 GMT),

Earnings events: AutoZone reports FY23 Q4 (ending 31 August) before the US market open with analysts expecting revenue of $5.6bn up 5% y/y and EPS at $45 up 11% y/y.

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

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • 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

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

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