Global Market Quick Take: Europe – October 31 2023 Global Market Quick Take: Europe – October 31 2023 Global Market Quick Take: Europe – October 31 2023

Global Market Quick Take: Europe – October 31 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  US equity futures trade lower after the biggest gain in the S&P 500 since August following overnight action which saw the Bank of Japan leave its yield-curve control unchanged while China’s factory activity slid back into contraction in October. The dollar trades higher against its G10 peers, not least against the JPY which trades back above 150, while the US bond market trades steady with US 10-year yields near 5% ahead of Wednesday’s FOMC meeting. Crude oil’s war premium has been erased on growing hopes the Israel-Hamas war will remain contained.

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

Equities: S&P 500 futures bounced back yesterday touching almost the 4,200 level intraday and this morning they trade a bit lower down at the 4,178 level. Hang Seng futures are down 2% today as October PMI figures show that China’s manufacturing sector slipped back into contraction. McDonald’s reported better-than-expected Q3 earnings with comparative sales beating estimates and said traffic grew internationally. Tesla shares were down 5% as Panasonic reported quarterly operating loss in its automotive batteries division on sluggish sales of high-end Tesla models, and the CFO said that factory will not run close to full capacity any time soon.

FX: Dollar was weaker on Monday amid improved strong risk sentiment before making a strong recovery in Asia after the BOJ remained dovish. USDJPY shot up above 150 after an earlier slide below 149 on speculation that BOJ may fasten policy normalization. AUDUSD reversed the gains to 0.6380 but gains could return with RBA rate hike still in play. AUDNZD returned back below 1.09. EURUSD rose above 1.06 yesterday despite both Spanish and German CPI coming in cooler than expected but returned just below 1.06 as focus will be on GDP and CPI data out today.

Commodities: Crude oil’s war premium has been erased after Monday’s sharp drop on growing hopes the Israel-Hamas will remain contained, and not spread to Iran, the markets biggest worry throughout this conflict. Also weighing on prices is the short-term demand outlook which is showing signs of softening. Gold holds above $1990 ahead of Wednesday’s FOMC meeting despite an improvement in risk appetite and a stronger dollar while copper’s recent rally was halted by a weak China manufacturing PMI print.

Fixed income: The Bank of Japan revised inflation forecasts upwards for 2023 and 2024 and made the 1% level just a reference point rather than a purchase pledged. At the same time, the US Treasury released its financing estimates indicating that it needs to borrow $776 billion, $76 billion less than announced in July. Both news is bearish for long-term sovereigns on both sides of the Atlantic. A BOJ normalizing monetary policy means allowing JGB (Japanese government bonds) yields higher, luring Japanese investors from abroad. The amount the US treasury needs to borrow is still a record high for the last quarter of the year, and coupon issuance might need to be increased. Overall, we expect yield curves to continue their bear steepening. Hence, we favour quality and a barbell strategy involving short-term bonds up to 3 years and the 10-year tenor for bonds on both sides of the Atlantic.

Volatility: VIX retreated to below 20, ending yesterday’s session at 19.75 (-1.52). VIX futures had a similar image and their overnight session shows no change (or slightly positive) after the stock market’s positive trading day. The VIX volatility index (VVIX) dropped below 100, to 95.23 showing some easing in market sentiment. S&P 500 E-mini futures and Nasdaq 100 E-mini futures moved both slightly negative overnight (-0.25% and -0.47% respectively), indicating a wait-and-see for the upcoming macro-events and earnings following later this week. The CBOE Skew index (VIX is calculated using ATM options, SKEW uses OTM options) also dropped to 130.13 (-2.61), pointing to less risk for big outlier moves.

Technical analysis highlights: S&P 500 support at 4,100-4,050. Nasdaq 100 downtrend, likely to drop below 14K, support at 13,590. DAX sliding lower, testing support at 14,675, next at 14,500. EURUSD could test 1.0635 resistance, but strong resistance at 1.07. Gold above 1,985 resistance, likely move to 2,025.  WTI key support at 81.50. US 10-year T-yields range bound 4.80-5.02

Macro: Germany slipped into contraction in Q3 with preliminary GDP data showing a decline of 0.1% q/q, but better than -0.2% expected. October HICP slowed to 3.0% y/y from 4.3% a month earlier and the 3.3% expected. Euro area Q3 prelim GDP and October CPI on watch today. Bank of Japan surprised dovish yet again, despite a Nikkei report last night suggesting that 10-year yield target could be revised higher. The central bank introduced flexibility in its YCC program, saying that the 1% cap will be reference rather than a strict ceiling. The inflation outlook was raised, but fiscal 2025 core inflation expectations are still below 2% suggesting BOJ is still of the view that inflation is transitory. China manufacturing PMI back in contraction. Following a brief visit above 50 last month the October print showed a drop to 49.5. Non-manufacturing PMI also decelerated to 50.6 from 51.7, below the Bloomberg consensus of 52.0.

In the news: UK shop price inflation at lowest since August 2022 –BRC (Reuters), Netanyahu Rules Out Cease-Fire (Bloomberg), Treasury to borrow $776 billion in the final three months of the year (CNBC), Oil prices could hit $150 if Israel-Hamas conflict intensifies, World Bank warns (FT), US carworkers suspend strike after reaching tentative deal with GM (FT), Tesla shares drop 5% on Panasonic battery warning, down 18% since Q3 earnings report (CNBC), McDonald's gets lift from diners turning to cheaper menu, new launches (Reuters), ON Semiconductor Stock Plummets After Offering Bleak Fourth-Quarter Outlook (WSJ).

Macro events (all times are GMT): EZ Flash CPI (Sep) Core exp. 4.2% YoY vs. 4.5% prior (1000), GDP (Q3) exp 0.2% YoY vs. 0.5% prior (1000), US Employment Cost Index (Q3) exp. 1.0% vs. 1.0% prior (1230), US Consumer Confidence (Oct) exp 100.5 vs 103 prior (1400).

Earnings events: Key earnings reports today from Anheuser-Busch InBev, BP, Caterpillar, AMD, Pfizer, Amgen, Eaton, Cameco, BASF, Uniper, BP, BBVA, First Solara. Caterpillar is the most important one expected to report Q3 earnings at 10:30 GMT with analysts expecting revenue growth of 7% y/y and EBITDA $3.6bn up from $3bn a year ago.

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

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

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 (
- Full 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

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.