Global Market Quick Take: Europe – 10 January 2024 Global Market Quick Take: Europe – 10 January 2024 Global Market Quick Take: Europe – 10 January 2024

Global Market Quick Take: Europe – 10 January 2024

Macro 3 minutes to read
Saxo Strategy Team

Summary:  US and EU equity futures trade softer following Tuesday’s mixed session on Wall Street. Apart from the Nikkei hitting a fresh 34-year high, equities are mostly in a holding pattern ahead of the US CPI release on Thursday and bank earnings on Friday. The false announcement of Bitcoin ETF approval caused some choppiness, with the actual announcement due today. In commodities, range-bound crude oil rose again as the focus returned to supply concerns. Apart from the US inflation print, the market also awaits stimulus news from China where inflation, trade and credit reports are due this week.


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

Saxo’s Q1 2024 Outlook titled “What happened to the future” is now out. You can read the executive summary here

Equities: Besides the renewed speculative fever in AI related stocks the other big development in equity markets is Japanese equities pushing to new all-time highs with Nikkei 225 futures up 2% in today’s session. One of the factors driving this trend is foreign investors leaving Chinese equities and another is the weak JPY with naturally also being the biggest risk should the JPY strengthen again. S&P 500 futures are trading just below the 4,800 level this morning and we do not expect big moves until tomorrow’s US inflation report has been released.

FX: The dollar continues to recover following Monday’s drop with the DXY holding well above the 102-level held up in DXY, with little data of relevance before Thursday’s US CPI release . USDJPY rose back to 144.70+, extending gains with the miss in labor cash earnings today. EURUSD tested support at 1.0910 with German data disappointing. GBPUSD also reversed to test the 1.27 handle support but staying supported for now.

Commodities: Oil prices trades higher for a second day as the tug-of-war between demand and supply concerns keep prices rangebound. The recent bid apart from short covering, being driven by a weekly drop in US stocks and more attacks on ships in the Red Sea. EIA’s STEO forecast a narrow global supply deficit this year while the front-end timespread in Brent show signs of a price supportive tightening. Copper trades lower on worries about global manufacturing and construction activity but hopes remain China will do more to stimulate its economy. Gold follows the ebb and flow of the dollar with key support around 2010 with a slump in ETF holding to a fresh four-year low weighing on prices

Fixed income: Strong demand at yesterday’s 3-year US Treasury auction drove yields slightly lower across maturities but failed to bring 10-year yields back below 4%. The auction stopped through When Issue by 1.1bps, pricing at a high yield of 4.105%, the lowest since May 2023. Today and tomorrow, the US Treasury will sell 10-year and 30-year bonds, respectively. The focus will be on auctions’ bidding metrics ahead of tomorrow’s CPI readings. The big question is whether duration continues to be appealing after the recent bond rally despite markets are priced to perfection reflecting the expectations of six rate cuts this year.

Macro: US NFIB small business optimism rose slightly to 91.9, a 5-month high, from expectations of 91.0. The increase was partly a reflection of holiday sales, but index remains subdued by historical standards. Sharp miss in German industrial production again highlighted concerns of Eurozone recession. November industrial production came in at -0.7 MoM from +0.3% expected and -0.3% last. Japan’s labor cash earnings came in below expectations at 0.2% YoY from +1.5% previously and expected. Real cash earnings were -3.0% YoY, much deeper than 2% drop expected by consensus, and may add to reasons for BOJ to continue to postpone a pivot.

Volatility: Volatility continues its descent with the VIX dropping to $12.76, hinting at calmer markets. The VVIX also fell to a low not seen since last September, reaching 78.59. Conversely, the SKEW-index climbed to 140.95, reflecting a rise in out-of-the-money option prices. Overnight, VIX futures and major index futures like the S&P 500 and Nasdaq 100 showed little change. However, with the VIX1D falling to 9.02, risk-reward ratios become challenging for 0DTE traders selling premium. As we approach earnings season, notable stocks such as Starbucks, Intel, and Microsoft display heightened implied volatilities, with IV Ranks surpassing 60%. With the CPI numbers due tomorrow, anticipate a potential spike in market volatility.

Technical analysis highlights: S&P 500 likely resuming uptrend, could test previous peak, support at 4,682. Nasdaq 100 likely resuming uptrend could test 17K, support 16,166. DAX likely resuming uptrend support at 16,470. EURUSD bounced from 0.618 retracement and support at 1.0882, could rebound to 1.10. USDJPY testing key resistance at 144.95 once again, a close above could lead to 146.60.  EURJPY testing key strong resist at 158.55, needs to close above for uptrend confirmation. Gold likely range bound 2,017- 2,065, could test 2K. Crude oil is struggling for upside momentum. 10-year Treasury yields rejected at 4.10 key resistance

In the news: Tesla lowers range estimates as U.S. regulators tighten vehicle-test rules (Reuters), SEC X Account Compromised to Falsely Say Bitcoin ETFs Approved (Bloomberg), With Trump present in court, judges express skepticism of claims that he’s immune from prosecution (AP), Boeing CEO admits mistake as investigators probe midair panel blowout (CNBC), Amazon’s Twitch to Cut 500 Employees, About 35% of Staff (Bloomberg), JD.Com's Dada identifies 'suspicious practices' in internal audit (Reuters)

Macro events (all times are GMT): EIA’s weekly crude and fuel stock report (1430), US to sell $37b 10-year notes (1700), Fed’s Williams give speech on 2024 economic outlook (1915)

Earnings events: No important earnings releases today.

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

Disclaimer

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.