Global Market Quick Take: Europe – 1 March 2024 Global Market Quick Take: Europe – 1 March 2024 Global Market Quick Take: Europe – 1 March 2024

Global Market Quick Take: Europe – 1 March 2024

Macro 3 minutes to read
Saxo Strategy Team

Summary:  European and US equity futures trade higher with Asia equities gaining after US stocks hit fresh records following in-line inflation data, fueled by a surge in semiconductor stocks, particularly AMD, which rose 9.1%. Dell and Autodesk surged in after-hours trading, with gains of over 17% and 9%, respectively, following robust quarterly results. January's US PCE data showed no hawkish surprises, aligning with expectations, supporting a move higher in gold to a three-week high, while BOJ's Takata's comments caused volatility in the Japanese yen, leading USDJPY to dip to 149.20 before recovering back above 150. Treasuries held steady after a two-day gain reduced the February spike in US 2-year yields to 44 basis points while the dollar ended February slightly higher.


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

Equities: Strong momentum in equities continues into the weekend with Hang Seng futures up 0.6% and both US and European equity futures are up 0.3% ahead of the market open. It has been a positive week for equities and in the last couple of trading sessions the market has begun pricing a bit loser Fed policy rate by December 2024 reversing the recent trend. Volatility remains subdued at around 13.5 on the VIX, but the flipside is equity valuations becoming dangerously high as we described in our equity update yesterday. Dell and Autodesk surged in after-hours trading, with gains of over 17% and 9%.

FX: A broad dollar index trades flat on the week and up 0.3% last month with choppy trading around the US PCE release failing to threaten any key levels. USDJPY rebounded from lows at 149.20 yesterday on BOJ Takata’s normalization comments and was back at 150.40+ levels as Governor Ueda threw cold water on tightening expectations as he said that price target was not already in sight. AUDUSD rose to 0.6510 as NZDUSD held up just below the 0.61 level with Governor Orr saying that rate cuts will not come soon. Swiss Franc led the decline yesterday, with USDCHF rising above 200DMA and threatening 0.8850. EURUSD failed to push above 1.0850 again, with regional inflation prints coming in mixed. Pair is now back at 1.08 handle, and Euro-area CPI will be on the radar today.

Commodities: The BCOM index fell 1.8% last month with all sectors in the red, led by grains (-6.7%) with sub 1% losses seen across metals, energy and softs. Biggest losers were US and EU natural gas amid mild weather, soybeans and corn, while gains were led by cocoa (33%) and cotton (15%). On Thursday crude oil continued to struggle for direction with OPEC+ meeting on the radar next week. Gold rose to a three-week high after US PCE data came in-line with expectations, keeping the rate cut expectation for later in the year alive. Base metals remain torn between weak China data and the prospects of strong demand for metals in India after a strong GDP growth of over 8% was reported. Focus is also turning to China’s “two sessions” meetings next week where growth target and policy agenda will be laid out.

Fixed income: Sovereign bonds from both sides of the Atlantic gained as US PCE met expectations, and European inflation numbers continued to decline. Since the start of the year, bond markets have priced out rate cuts until June, so disinflationary trends are now in focus. The data will lead to Federal Reserve and ECB rate cut decisions before summer. Long-term US Treasury yields fell by 3 to 4 basis points, leaving the yield curve slightly flatter, and the 10-year yields closed at 4.25%. In Europe, Bund yields fell by roughly 5 basis points to 2.41%, with other European sovereigns following suit. However, breakeven rates continue to increase, with the US 2-year breakeven up to 2.79%, the highest since March 2023, and the 2-year zero-coupon inflation swap rose to 2.445%, the highest since October. Today's focus is on the global manufacturing PMI, US ISM manufacturing numbers, and Europe's flash CPI numbers for February. ECB's Holzmann and BOE's Pill will speak today, followed by Fed's Barking, Waller, Logan, Bostic, Daly, and Kugler in the US. Our preview of next week’s ECB monetary policy meeting is available here.  On the occasion of Hungary clearing the path for Sweden’s Nato membership, we look at defense bonds here.

Macro: There was a lack of hawkish surprises in the January PCE data with both headline and core prints coming in line with expectations. Core M/M accelerated to 0.4% from 0.2%, with the headline rising to 0.3% from 0.2%. Core Y/Y eased to 2.8% from 2.9% with the Y/Y headline easing to 2.4% from 2.6%. Inflation generally has been showing signs of cooling on an annual basis, but M/M elements are showing a sign of pickup. The core PCE annualised rates rose with the 3-month rising to 2.8% from 2%, and the 6-month rising to 2.6% from 2.2%. Fed officials again warranted caution on inflation and rate cuts. Bostic (voter) said there’ll be “some bumps along the way” to the 2% price target. Mester (voter) said that right now her baseline forecasts for three cuts in 2024 still feels about right. Goolsbee (2025 voter) expressed caution about interpreting one month’s inflation report and Daly (voter) said policy is in a good place and they could cut if they needed but if they cut too quick, inflation can get stuck. US Initial Jobless Claims rose by 215k, rising from the prior 202k and above the 210k consensus. The continued claims, for the week that usually coincides with the BLS survey period, rose to 1.905mn from 1.860mn, above the 1.874mn consensus. Inflation saw signs of easing in Germany, France and Spain with falls driven primarily by energy and food prices. This could mean that Euro-area inflation today could also come in lower, but sticky services prices continue to constrain expectations around ECB easing. China’s manufacturing PMI slowed to 49.1 in February from 49.2 in January. The consistent weakness in China’s manufacturing PMI — which has been below 50 for five consecutive months — comes as Beijing is due to open the annual meeting of the National People’s Congress, on Tuesday, where it will announce its targets for economic growth and fiscal stimulus this year.

Volatility: Yesterday saw the VIX dipping to $13.40 (-0.44 | -3.18%), indicating a decrease in market volatility. Today's economic focus is on the S&P Global US Manufacturing PMI and the ISM Manufacturing PMI, with no significant earnings reports expected to impact market dynamics significantly. VIX futures decreased slightly, down to 13.950 (-0.06 | -0.42. Meanwhile, S&P 500 and Nasdaq futures are in the green, at 5114.75 (+11.00 | +0.22%) and 18146.25 (+63.50 | +0.35%) respectively. Thursday's most active stock options trading included, in order: AMD, TSLA, NVDA, AAPL, MARA, SNOW, AI, AMZN, SOUN, and META

In the news: Europe is having its worst earnings season since the onset of Covid (CNBC), China’s economy suffers blow as factory activity slows (FT), India Q3 GDP growth surges to 8.4%, exceeding expectations (Nikkei Asia), NY Community Bancorp disclosed material weaknesses in its internal controls, CEO Steps Down (WSJ)

Macro events (all times are GMT):  Manufacturing PMIs from Italy (0745), France (0750), and Germany (0755), Eurozone Manufacturing PMI (Feb) exp 46.1 vs 46.1 prior (0800), EU CPI (Feb) exp 0.6% & 2.5% vs –0.4% & 2.8% (0900), US Manufacturing PMI (Feb) exp 51.5 vs 51.5 prior (1345), COT reports from CFTC and ICE Europe covering the week to Feb. 27 (2030)

Earnings events: Thin earnings calendar today. Kuehne + Nagel has already reported Q4 results with net revenue and EBIT missing estimates.

  • Friday: Canadian Natural Resources, Kuehne + Nagel

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

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 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

Disclaimer

The Saxo Bank 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. This content is not intended to and does not change or expand on the execution-only service. 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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/legal/disclaimer/saxo-disclaimer)


Business Hills Park – Building 4,
4th Floor, office 401, Dubai Hills Estate, P.O. Box 33641, Dubai, UAE

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.