Global Market Quick Take: Europe – 11 June 2024 Global Market Quick Take: Europe – 11 June 2024 Global Market Quick Take: Europe – 11 June 2024

Global Market Quick Take: Europe – 11 June 2024

Macro 3 minutes to read
Saxo Strategy Team

Key points:

  • Equities: Chinese equities down 1.5%. Apple announces new AI platform.
  • Currencies: Sterling hits 21-month high against the euro
  • Commodities:Summer demand lifts crude and natural gas
  • Fixed Income: Focus on US sale of 10-year bonds
  • Economic data: UK jobs report

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

In the news: S&P 500, Nasdaq post record closing highs; Fed meeting, CPI ahead (Investing). Musk warns that he will ban Apple devices if OpenAI is integrated at operating system level (Investing), Dollar Firms Ahead of Fed Decision, Helped by Euro's Weakness (Barron’s), Gold is getting harder to find as miners struggle to excavate more, World Gold Council says (CNBC), GameStop shares slide 12% following Friday’s 40% sell-off (CNBC), Nvidia stock rises after 10-for-1 stock split (Yahoo), Oil prices up 3% to one-week high on hopes of higher summer fuel demand (Reuters)

Equities: Hong Kong equities are down 1.5% in today’s session following iron ore lower as investors are questioning whether China is doing enough to contain the weakness in its property sector. China’s golden week consumption data was weaker compared to a year ago highlighting the weakness of the Chinese consumer. Futures are currently indicating a flat opening in the US and Europe. ECB’s Lagarde says that the central bank is not on a linear path when it comes to cutting its policy rate in another effort to stay hawkish following its recent rate cut. Apple is in focus today after it announced its new AI platform called Apple Intelligence which run in partnership with OpenAI. Today’s earnings focus is on Oracle expected to report revenue growth of 5% YoY and EPS of $1.64 up 33% YoY.

Macro: The Fed is widely expected to keep borrowing costs on hold when they meet on Wednesday, a day that also sees the release of US consumer price data, but there’s less certainty on officials’ rate projections. A 41% plurality of economists expect policymakers to signal two cuts in their “dot plot” while an equal number expect the forecasts to show just one or no cuts at all.

Macro events (times in GMT): UK unemployment rate (Apr) exp unchanged at 4.3% (0600), Can Building Permits (Apr) exp 5% MoM vs –11.7% (1230), OPEC’s Monthly Oil Market Reports, EIA’s Short-term Energy Outlook (1600)

Earnings events: Quiet week ahead on earnings with the key releases to watch being Oracle (Tue), Broadcom (Wed), and Adobe (Thu). Today’s only large earnings release is Autodesk (no time) which is expected to report revenue growth of 10% YoY and EPS of $1.77 up 141% YoY.

  • Today: Oracle, GameStop, Casey’s General Stores
  • Wednesday: Dollarama, Broadcom
  • Thursday: Adobe, Halma, Wise

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

Fixed income: The Treasury market experienced minimal shifts as a lackluster $58 billion three-year auction dampened sentiment ahead of Tuesday's $39 billion 10-year sale. French debt widened the yield premium over its German counterpart to the highest level in six months following President Emmanuel Macron's announcement of a snap election after his party's disappointing performance in a European vote. Futures of Japan's 10-year notes concluded the overnight session with a 3-tick increase at 143.51. The yield curve displayed a significant bear-steepening on Monday, with the 30-year tenor rising by 9 basis points to 2.180%.

Commodities: Crude oil holds biggest gain since March, supported by buy-the-dip activity after the weekly COT report showed a massive drop in the net long held by hedge funds. Also, some fundamental support emerging from expectations for strong summer demand towards mobility and cooling, and stalling US production. Monthly oil market reports from OPEC and the EIA today should shed some light on expectations for demand into the second half. Gold recovered back to $2,300 after holding key support, with focus on US CPI and FOMC meeting. US natural gas futures hits five-month high above $3/MMBtu, driven by hotter weather forecasts and earlier production cuts which are easing elevated storage concerns.

FX: The US dollar strengthened further on Monday in response to Friday’s strong US jobs report and political issues in the EU, which resulted in the euro dropping to a 1-month low of 1.0733 before stabilizing, as discussed in this article. Key events to watch are US inflation data and the Fed's announcement on Wednesday. The euro faces pressure from an ECB rate cut and upcoming French elections, with a key technical level at 1.0721. The euro also hit a 21-month low against the British pound (GBP) after EURGBP broke below 0.85. The USDJPY remains around 157, with potential intervention from Japan's central bank likely capping its rise ahead of the Bank of Japan's Friday announcement. The Australian dollar rebounded from its 50-day moving average, trading around 0.66 while the British pound trades near Monday’s high at 1.2730 ahead of UK jobs data.

Volatility: The VIX ended Monday at $12.74 (+0.52 | +4.26%), reflecting a rise in market volatility leading up to the Fed Interest Rate announcement. Short-term volatility also saw significant changes, with the VIX1D dropping to $8.26 (-1.04 | -11.18%) while the VIX9D increased to $12.85 (+0.52 | +4.22%). S&P 500 and Nasdaq 100 futures showed slight declines, with S&P 500 futures at 5366.00 (-5.25 | -0.10%) and Nasdaq 100 futures at 19089.25 (-20.50 | -0.11%). Oracle's earnings report is due after the bell tonight. Yesterday's top 10 most traded stock options were Nvidia, Apple, GameStop, Tesla, Advanced Micro Devices, Amazon, AMC Entertainment Holdings, Palantir Technologies, Meta Platforms, and Alphabet (Google). Notably, Nvidia saw the highest options volume at 5,177,148 contracts traded, followed by Apple and GameStop, both with volumes above 1 million contracts.

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