Global Market Quick Take: Europe – 19 January 2024

Global Market Quick Take: Europe – 19 January 2024

Macro 3 minutes to read
Saxo Be Invested
Saxo Strategy Team

Summary:  US equity futures trade higher led by the tech-heavy Nasdaq 100 index which rallied 1.5% on Thursday on optimism about the semiconductor and AI space after Taiwan’s TSMC, the main supplier of chips to Apple and Nvidia said it saw return to solid growth this quarter. Overall, it’s been a week that has seen both the dollar and US Treasury yields trade sharply higher as better-than-expected macro data prompted a rethink of the timing, pace and depth of US rate cuts. The dollar trades broadly stronger on the week with the USDJPY rising to fresh highs while commodities trade mixed with focus on weak China data and geopolitical tensions.


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

Equities: The Nasdaq 100 rallied 1.5% as optimism about the semiconductor and AI space rose following Taiwan Semiconductor Manufacturing Co beat estimates in its Q4 results and said it expected a return to solid growth and increase in capital spending. The company which is the main supplier of chips to Apple and Nvidia saw its ADR jump 10% during the US session, supporting a fresh record close for the Nasdaq. Lam Research and Qualcomm surged over 4% while Nvidia gained 1.9%. Apple added 3.3% on an analyst upgrade.

FX: Dollar followed the mixed trajectory of bonds amid the decline in jobless claims prompting a re-think of the Fed path while market remains firm in its expectations. AUDUSD failed the test of 0.66 as iron ore prices reversed trajectory in Asia today, and NZD also slumped to drop back below the 0.61 handle. Yen, meanwhile, continued to weaken. USDJPY rose to fresh highs of 148.72 as BOJ policy normalization hopes continue to fade ahead of the meeting next week. GBPUSD broke above 1.27 and retail sales data will be on watch today. EURUSD found support at 200DMA around 1.0850 and reversed higher to 1.0890.

Commodities: Crude oil prices rallied once again with Middle East tensions in focus and after US stockpiles showed a surprise drop as exports rebounded and harsh winter disrupted production. Base metals also had a strong day with copper rising from a two-month low with supply concerns in focus, even as expectations of further China stimulus were doused with comments from Chinese Premier, Li Qiang. Gold trades down on the week, driven by USD and economic data strength, but has managed to bounce after finding support near $2000 with silver also holding above its key support at $22.50.

Fixed income: Fixed income: The 10-year Treasury yield extended its rise by 4bps, reaching 4.14% after initial jobless claims unexpectedly fell to 187k, the lowest level since September 2022. The sign of a resilient labour market caused investors to pare somewhat expectations of the size and pace of the Fed’s rate cuts this year. The 10-year TIPS auction stopped through by 1bps awarding the lowest auction yield since July at 1.81%. Today the focus turns on the University of Michigan survey, particularly on inflation expectations. We continue to see the first cut coming this March, contributing to a bill steepening of the yield curve.

Macro: US jobless claims fell to 187k from 203k, coming in the lowest since Sept 2022 despite expectations of a rise to 207k. Continued claims, for the week prior, eased to 1.806mln from 1.832mln, despite expectations for an increase to 1.845mln. These numbers could question the assumption of over five Fed rate cuts priced in for this year. Fed’s Bostic urged caution on rate cuts amid geopolitical risks, but Harker said that he expects inflation to continue to slide towards target. The Philly Fed Business Index improved to -10.6 in January (prev. -12.8) easing some concerns from the NY Fed survey earlier this week but was still below expectations at -7.0. Internally, New Orders and Employment printed -17.9 (prev. -22.1) and -1.8 (prev. -2.5), respectively, with Capex Index rising to +7.5 (prev. -7.5) and Shipments lifting 5 points to -6.2. ECB minutes showed little support among members of the Governing Council for reducing interest rates before June. Japan’s inflation cooled in December but remained above target. Headline CPI rose 2.6% YoY, softer than 2.8% YoY in November but a notch above expectations. Other measures met expectations, with core at 2.3% YoY from 2.5% previously and core-core at 3.7% from 3.8% previously. UK December retail sales m/m dropped 3.2%, compared to a -0.5% estimate. On a yearly basis, sales fell 2.4%, compared to an estimate for a gain of 1.1%.

Volatility: Volatility dipped as the VIX closed at $14.13 (-0.66 | -4.46%), a decrease of 4.46%, amid gains in tech and AI sectors influenced by positive news from TSMC and an Apple upgrade. The SPX and NDX ended up by 0.88% and 1.47%, respectively. VIX futures are down this morning to 14.900 (-0.105 | -0.69%), aligning with slight increases in S&P 500 and Nasdaq futures: 4814 (+2.75 | +0.06%) and 17159 (+49 | +0.29%) respectively. Today's market is expected to be relatively quiet with no major economic reports or earnings releases anticipated. Investors may look ahead to next week's heavy earnings schedule, which includes MSFT, NFLX, J&J, PG, TSLA, and ASML.

  • In the news: TSMC’s Outlook Backs Hopes for Global Tech Recovery in 2024 (Bloomberg)
  • China unearths million-tonne lithium deposit, heating up global resource race as Thailand also boasts big find (SCMP)
  • Private-equity investors to return to China in search of M&A deals in 2024, Bain & Co says (SCMP)
  • Bitcoin Retreats to One-Month Low as ETF-Led Enthusiasm Wanes (Bloomberg)
  • Apple gets a big upgrade from Bank of America, which calls for more than 20% upside ahead (CNBC)

Macro events (all times are GMT): Uni of Michigan Sentiment (Jan) exp 70.1 vs 69.7 prior, and expectations exp 67 vs 67.4 prior (1400)

Earnings events: Schlumberger, Travelers, State Street, Firth Third, Huntington, Regions Financial

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

Quarterly Outlook

01 /

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • 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

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
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.