Global Market Quick Take: Europe – 22 December 2023

Global Market Quick Take: Europe – 22 December 2023

Macro 3 minutes to read
Saxo Be Invested
Saxo Strategy Team

Summary:  Today’s key event is US PCE deflator report, but we expect all markets to remain quiet as the year-end holiday period sets in. Equity futures are lower across the board with Chinese equities declining the most on new rules attempted curb spending on gaming. US economic data releases yesterday reinforced the market narrative of weaker USD and five US rate cuts next year. Brent crude is trading above $80/brl again with Angola announcing yesterday that it is withdrawing from OPEC. Nike shares plunged 12% in extended trading on a softer than expected revenue outlook announcing a cost savings plan of up to $2bn.


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

Equities: Futures are headed lower across the board with Hang Seng futures down 1.5% declining the most driven by declines in technology stocks as China is announcing a new set of policies to curb spending on gaming hitting companies such as Tencent and NetEase. Nike shares plunged 12% in extended trading as the US sports apparel maker lowered its revenue guidance over the next six months and announcing cumulative cost savings of up to $2bn. Today’s key macro event to impact US equities is the US PCE Deflator figures for November.

FX: USD weakened following economic data releases that reinforced expectations of a US rate cut. DXY, the dollar spot index, dropped by 0.6% to 101.84. USDJPY extended its slide by 1% to 142.10, while the AUD gained 1% to 0.68, and the EUR strengthened by 0.6% to 1.10 against the dollar. The November US PCE data, scheduled for later today, is the last significant piece of information that could potentially move the FX market before the start of the festive season.

Commodities: Crude oil are trading today with Brent above $80/brl again despite Angola’s announcement to leave OPEC, reflecting discontent among some oil-producing countries. The dissatisfaction arises from OPEC's, under the leadership of Saudi Arabia, persistent efforts to keep crude oil prices high, often at the expense of market shares. This has led to a loss of shares, primarily to US producers. Attacks on ships in the Red Sea are still a supportive factor for crude oil and most ships between Asia and Europe are rerouted south of Africa.

Fixed income: Treasury yields rebounded from their lows to finish the session modestly higher, with the 10-year yield settling at 3.88%. This takes the US 10-year yield back to the level where it started in 2023 ending the year at 3.87% with an unusual trading range (3.24% to 5.02%). All eyes are now on the release of the November PCE deflators scheduled for today.

Macro: US initial jobless claims increased to 205k from 203k (revised up from 202k) but was below the median projection of 215k. Continuing claims came in at 1,865k, also below the consensus. US Philadelphia Fed business outlook decreased to -10.5 in December, from -5.9 in November and much softer than the -3.0 median forecast. Capex intention plunged and was one of the key factors dragging down the index. On its third estimate, the US Q3 GDP was revised down to 4.9% from previous reported 5.2%. Personal consumption was revised down to 3.1% from 3.6%. Inflation was also lower than previously reported as the GDP deflator was revised down to 3.3% from 3.6% and the quarterly Core PCE deflator was lowered to 2.0% from 2.3%. The JPM GDP Nowcast index is still trending higher highlighting that the US economy is estimated to have increased its growth rate in December.

In the news: New rules in China announced to curb spending on games causing Tencent and NetEase shares to plunge (Reuters). Consumers do not want used EVs which is beginning to hurt primary sales of EVs (Bloomberg). Eurozone economies are likely to be hit by lower fiscal impulse in 2024 (FT). Geopolitical risks continue to be a key risk with the US under pressure on its Gaza strategy (FT). Nike sinks 10% after it slashes sales outlook, unveils $2 billion in cost cuts (CNBC).

Macro events (all times are GMT): Italy consumer confidence (Dec) est. 104.0 vs 103.6 (0900), US personal spending (Nov) est. 0.3% vs 0.2% prior (1330), US PCE Deflator YoY (Nov) est. 2.8% vs 3.0% prior (1330), US Durable Goods Orders (Nov P) est. 2.3% vs -5.4% prior (1330), US New Home Sales (Nov) est. 690k vs 679k prior (1500)

Earnings events: No earnings releases today.

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

Quarterly Outlook

01 /

  • 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 ...
  • 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...
  • 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.