Market Quick Take - February 3, 2021 Market Quick Take - February 3, 2021 Market Quick Take - February 3, 2021

Market Quick Take - February 3, 2021

Macro 4 minutes to read
Saxo Strategy Team

Summary:  Another strong day for risk-takers as US equities surged strongly yesterday and a strong Asian session brought the US equity futures to within a percent of all-time highs. The most-shorted stock squeeze may have suffered a fatal blow, as did the attack on silver, for now at least. In FX, the US dollar remains firm as EURUSD suffered its lowest close since early December and threatens the important 1.2000 level.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – US equity futures continue to climb back to the levels from before the sell-off last week, that was induced by the odd balls from short squeezes orchestrated by ‘WallStreetBets traders’, which caused hedge funds to drastically reduce gross leverage in their portfolios. As trade restrictions were implemented in several of the US short squeeze stocks the market stabilised and Nasdaq 100 futures are now back above 13,500 with hedge funds increasing leverage again. Yesterday, our ‘Bubble Stocks’ basket also did very well, indicating that investors are back trading momentum.

EURUSD – the USD rise yesterday saw EURUSD taking out an important local pivot yesterday - the prior 1.2050 area low. This brings into view what many believe is the key trend support in the 1.2000 area, which was also near the prior high of the cycle, and given the EURUSD’s history of sticky trading around big round levels, is also a major psychological support, although the more technical breakdown level is perhaps the 1.1890 area, which is the last major Fibonacci retracement of the rally wave from the early November lows. A breakdown would require a major rethink for the market narrative on the US dollar, as the strong consensus is in favour of a weaker USD this year.

AUDUSD dropped yesterday as low as 0.7564 on the rather dovish RBA meeting and the stronger US dollar, but managed to bounce back above 0.7600 overnight, likely in part on the ongoing surge in risk appetite, although one important concern for the Aussie, a significant drop in iron ore prices, remains. The 0.7600-25 area is pivotal for the pair as we watch whether this remarkable USD resurgence (not so much for the magnitude of the rise, but rather that it has unfolded despite a powerful surge of strong risk sentiment) continues. Looking lower, if selling resumes, the longer-term uptrend won’t be challenged unless the pair challenges the 0.7400 area.

Silver’s go it alone rally has finished and after failing to break above $30/oz and following a 12% correction it has now found support ahead of $26/oz. Without support from gold (XAUUSD), the rally was doomed to fail given the lack of fundamental reasons for the gold-silver ratio (XAUXAG) moving to a seven-low at this point in the cycle. Having fully retraced the rWallStreetBets inspired rally, the focus now turns to gold and its ability to recover from this week’s strong dollar-led weakness. With 10-year real yields falling back below 1%, a potential line of support has emerged at $1830. Silver traders will also keep an eye on HG copper (COPPERMAR21) which despite Chinas cash crunch and weak PMI has found support ahead of $3.47.

Brent crude oil (OILUKAPR21) and WTI crude oil (OILUSMAR21) trade at the highest in a year, supported by the broader rally in financial markets and reports showing declining stocks in both US and China, the world’s biggest consumers. OPEC+ look set to having drained the global oil surplus by the middle of the year. This after Saudi’s unilateral production cut decision has helped support stable prices through a troubled period of resurgent coronavirus and lockdowns. The OPEC+ Joint Ministerial Monitoring Committee (JMMC) meets today but no decisions on production level is expected before the early March OPEC+ meeting. Focus today EIA’s weekly stock report with API data pointing to another strong draw in crude oil stocks.

Expect BTPs to rise on news that Draghi begins talks with President Mattarella to form a technical government (10YBTPMAR21). Talks between parties to form a new majority led by Conte failed, and today Draghi will meet President Mattarella to talk about the prospects to form a technical government. We expect the BTPs to act positively on the news as Mario Draghi as Italian PM would send a strong pro-European message. The 10-year BTP yields could dive between 12 and 19bps, while long maturities will benefit the most. To learn more click here.

Amazon (AMZN:xnas) and Alphabet (GOOGL:xnas) - both companies delivered very strong results yesterday as expected and formulated in our earnings preview from this Monday. Amazon delivered a 5% revenue surprise highlighting the strong demand for e-commerce and cloud services. Alphabet’s revenue also surprised by 5% and driven by strong online advertising spending.

What is going on?

China Jan. Caixin Services PMI disappoints with weakest reading in nine months - the independent survey was out with a reading of 52.0 vs. 55.5 expected and 56.3 in December, marking a sharp deceleration and the weakest reading since April of last year. This confirms the drop in the official “non-manufacturing” survey which likewise dropped sharply for January to a reading of 52.4. Some of the slowdown may be attributable to restrictions on travel linked to the response to virus trouble spots in China in January.

Alibaba is looking to issues $5bn worth of bonds this week after the company posted a revenues gain (BABA). The company has been looking to issue bonds since the beginning of the year but talks stalled when Jack Ma went out of sight. After the revenue gain of last quarter, the company resumes its plan to issue $5bn bond sales in various tranches with the longest maturity being 40 years and some will be sustainability bonds for eligible projects.

What are we watching next?

Will a rising US dollar and/or US yields act to slow recent risk sentiment surge? It has been unusual to witness a surge in global risk sentiment at a time when the US dollar has also rallied notably, although the rise has not been particularly sharp, about 2% depending on the measure of the US dollar. But if this extends further, the rising cost of the world reserve currency could begin to slow market confidence as it represents a tightening of liquidity. So too could any further rise in long US yields, which have inched back toward cycle highs and could represent an even greater risk of a setback for risk assets if yields rise sharply as they did in the first week of the year.

Big week ahead in the earnings season with Amazon, Alphabet, and Alibaba
Strong earnings from Amazon, UPS, and Alphabet (Google) yesterday bolstered equity sentiment and helped push Q4 EPS in the MSCI World Index into positive growth y/y. In other words, aggregate corporate profitability is now back above levels from before the pandemic. Today the most important earnings release to watch is from PayPal. Read this week’s earnings preview here.

  • Today: Ping An Insurance, Novo Nordisk, Siemens, Sony, GlaxoSmithKline, PayPal, Qualcomm, AbbVie
  • Thursday: Unilever, Royal Dutch Shell, Chugai Pharmaceutical, Philip Morris, T-Mobile US, Roche, Merck & Co, Bristol-Myers Squibb
  • Friday: NTT, Linde, Sanofi, Estee Lauder, Deutsche Telekom

Economic Calendar Highlights for today (times GMT)

  • 0815-0900 – Euro Zone Jan. Final Services PMI
  • 0930 – UK Jan. Final Services PMI
  • 1000 – Euro Zone Jan. Flash CPI Estimate
  • 1315 – US Jan. ADP Employment Change
  • 1445 – US Jan. Final Markit Services PMI
  • 1500 – US Jan. ISM Services Index
  • 1530 – US Weekly DoE Crude Oil and Product Inventories
  • 1800 – US Fed’s Bullard (non-voter) to speak
  • 1900 – US Fed’s Harker (non-voter) to speak
  • 2200 – US Fed’s Mester (non-voter) to speak
  • 2200 – US Fed’s Evans (voter) to speak
  • 0000 – New Zealand Feb. ANZ Business Confidence survey
  • 0030 – Australia Dec. Trade Balance

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 (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
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 Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML 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 Markets 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