Global Market Quick Take: Europe – 13 December 2023 Global Market Quick Take: Europe – 13 December 2023 Global Market Quick Take: Europe – 13 December 2023

Global Market Quick Take: Europe – 13 December 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  US equity futures trade steady following another strong session on Wall Street on Tuesday, while Chinese stocks led Asia lower after its leadership failed to announce more forceful stimulus to boost growth. The main focus today is on the conclusion of the FOMC meeting after the latest inflation data lowered future rate cut expectations with the first cut not expected until May. Developments that saw the dollar strengthen, gold suffering another setback while crude oil slumped to a five-month low.


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

Equities: Wall Street witnessed another strong day on Tuesday with the S&P 500 up 0.5% while the Nasdaq 100 added 0.8% to reach a new high for the year. The VIX index, the so-called fear index slumped to an almost four-year low. Eight of the 11 S&P 500 sectors gained, while energy fell 1.4% amid a near 4% plunge in crude oil prices. Oracle plummeted 12.4% after reporting weaker-than-expected revenue. Broadcom surged 4.2% after a major investment bank called for a buy, citing AI tailwinds. Besides the FOMC, investors have their eyes on Adobe’s quarterly results, scheduled to release today for a gauge of the AI business landscape.

FX: The dollar trades a tad firmer in Asia as focus turns to the FOMC announcement today and whether any pushback to market’s rate cut pricing is likely. Japanese yen was the outperformer on Tuesday, with USDJPY dropping to 144.74 before rising back to 145.80. Other currencies were in smaller ranges except kiwi which plunged in Asia session on fund selling as dovish expectations picked up. NZDUSD is now testing 0.61 with AUDNZD back above 1.0750. EURUSD unable to break above 1.08 handle while GBPUSD trades mixed around 1.2550. USDCNH seeing upside risks as it gets closer to 7.20 with China seen to be skipping a big demand stimulus coming out of a key meeting.

Commodities: Crude oil plunged almost four dollars to its lowest level in five months on Tuesday with increased flows from Russia raising doubts about OPEC compliance. An upgrade to US production and rising US crude stocks at Cushing also weighing. OPEC, who very wrongly as it turned out, recently forecast a massive supply deficit will publish their monthly report later today. Gold’s premature FOMO rally at the beginning of the month and subsequent correction continues to haunt the market, now with the added pressure from traders scaling back 2024 rate cut expectations. Copper trades lower with the Chines Yuan amid disappointment China’s Central Economic Work Conference failed to announce fresh stimulus measures for 2024.

Fixed income: Despite a small surprise in the monthly headline US CPI data, markets were able to digest the Treasury’s 30-year bond sale discreetly well yesterday. Indirect and direct bidders demand increased markedly, and the auction stopped through by 0.3bps. Today, markets’ focus shifts to the FOMC meeting, where investors are interested to know whether the Fed is done hiking rates and how early it will begin to cut. Across the Atlantic, fears of a recession are taking hold of the UK, whose monthly GDP came well below expectations at –0.3%. That is likely to boost BOE interest rate cut expectations for 2024, with ten-year Gilt yields continuing their drop to 3.87%.

Macro: US November CPI was broadly in-line with expectations with only a minor beat on the headline MoM which rose 0.1% vs. expectations of remaining flat but YoY was 3.1% as expected. Core was in-line with expectations at 0.3% MoM and 4.0% YoY. A small number of categories drove bulk of the gains, and this print continues to put an emphasis on the end of the Fed’s rate hike cycle but a complete dovish turn still appears to be unlikely. UK’s wage growth missed expectations with payrolls turning negative at -13k for Nov from 39k previously and 5k expected. Wage growth came in below expectations as well, although still stuck in the 7% range. However, data serves as a reminder that BOE can cut sooner than expected. China concluded the Central Economic Work Conference, which set the agenda for economic policies in 2024 on Tuesday. Among other priorities, the conclave emphasized: 1) Developing new industries and business models through technological innovation, 2) Expanding domestic consumption and investment, 3) Deepening reforms, 4) Opening up the economy, 5)Preventing and resolving risks, including those in the property sector, local government debts, and small to medium-sized financial institutions, 6) Rural development, 7) Integration of cities and rural areas, 8) Green and low-carbon emissions, 9) Improving people’s livelihood. These priorities are essentially familiar rhetoric in recent years. Investors are likely to adopt a wait-and-see attitude pending further policy developments. Weaker than expected UK data: October GDP showed a 0.3% contraction (-0.1% expected). The trade deficit is also wider than anticipated, at £4.48 billion compared to the £2.15 billion expected. Industrial production fell by 0.8% in the monthly figures, much weaker than the 0.1% estimate. On a yearly basis, it rose by 0.4%, also behind the 1.1% growth expected. Manufacturing production fell by 1.1% month-on-month and construction output was down 0.5%. Again, both worse than forecast.

Technical analysis highlights: S&P 500 no resist until 4,818, support at 4,458. Nasdaq 100 uptrend eyeing 16.750, support at 15,744. DAX uptrend very stretched, support at 16,469. EURUSD bouncing from 1.0730 testing 1.0825, close above next is 1.10. USDJPY resistance at 147.50, still in downtrend. EURJPY strong resist at 157.70, support at 155.52. GBPUSD rejected at 1.2745, support at 1.2445. Gold testing 1,975 once again a close below could drop to 1,950-1,930. WTI Crude oil support at 67. Brent support at 71.93. 10-year T-yields could bounce to 4.35 resistance

In the news: China Puts Focus on Industrial Policy, Skips Big Demand Stimulus (Bloomberg), Global EV sales hit new record in November - Rho Motion (Reuters), Sweden Posts Sharp Home-Price Plunge as Rates Hit Global Markets (Bloomberg). Japan Large Manufacturer Sentiment Improves Ahead of BOJ Meeting (Bloomberg), Argentina devalues peso, cuts spending to treat fiscal deficit 'addiction' (Reuters), Firms more confident ahead of BOJ policy meeting, tankan shows (Japan Times)

Macro events (all times are GMT):  EZ Industrial Production (Oct) exp –0.3% & -4.6% vs –1.1% & -6.9% (0900), US PPI (Nov) exp 0.0% & 1% vs –0.5% & 1.3% (1230), OPEC’s Monthly Oil Market Report, EIA’s Weekly Crude and Fuel Stock Report (1430), FOMC Rate Decision (1800)

Earnings events: Key earnings releases today from Adobe

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.