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

Global Market Quick Take: Europe – 13 November 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  US equity futures traded softer overnight while Asian equity markets stuck to narrow ranges. This follows a strong Friday rally on Wall Street where mega-cap technology and semiconductor stocks propelled the S&P 500 higher by 1.6% to 4,415 and the Nasdaq 100 by 2.3% to 15,529. Nvidia gained 3%, marking its 8th consecutive day of increases while Microsoft added 2.5%, extending its rise for the 10th day. Focus this week on Tuesday’s US inflation print and Wednesday’s summit between Joe Biden and Xi Jinping.


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

Equities: Strong ending to US equities on Friday with S&P 500 futures closing above the 4,400 level for the first time in a month indicating that the technical picture is increasingly looking strong going into the last month of the year. Cyclical sectors are now the strongest against defensive sectors since February 2022 when equity investors went defensive on higher interest rates. Key earnings to watch this week include Home Depot (Tue), Tencent (Wed), TJX (Wed), Cisco (Wed), Palo Alto Networks (Wed), Siemens (Thu), Walmart (Thu), Applied Materials (Thu), and Alibaba (Thu).

FX: : The US dollar oscillated within a narrow range against the G10 currencies last Friday, except the Norwegian Krone (NOK) which strengthened by 1% after a hot CPI print that increased the likelihood of rate hikes from the Norges Bank. Rising intervention risks in USDJPY after reaching 151.80, just below last year’s high, the highest level since 1990.

Commodities: Steep losses in platinum and palladium led the metal sector lower last week with silver, copper and gold all falling with focus on a weak economic growth outlook and following hawkish comments from Powell at the IMF conference. Spot gold trades near key support in the $1930-35 area. A weakening demand outlook continues to dominate the energy space with crude oil extending a three-week decline ahead of monthly oil market reports from OPEC today and IEA on Tuesday. A resumption of oil exports from Northern Iraq also in focus. CFTC’s weekly COT report was delayed until today.

Fixed Income: last week’s ugly 30-year US Treasury auction and hawkish Powell’s remarks reignited the bear-steepening trend of the yield curve. On Friday, Moody’s changed the outlook of the U.S. debt to negative from stable, exposing the country to the risk of another downgrade due to its deficit unsustainability and increase of political polarization. The ten-year US treasury closed the week above 4.50%, remaining in an uptrend. This week the focus shifts to US CPI numbers on Tuesday, with the YoY core numbers expected to remain unchanged at 4.1%, but headline numbers expected to fall to 3.3% from 3.7%. Any surprise to the upside could push back expectations for future rate cuts. On Wednesday, inflation figures are also released in the UK. Overall, we expect yield curves to continue to steepen, and the long part of the yield curve to remain vulnerable to supply-demand dynamics and inflation expectations.

Volatility: While the VIX continued its decline last week, the pace of its descent slowed, and it ended the week's session at 14.17, down $0.74 or 4.96% for the week. Stock markets reacted accordingly and moved higher, with the S&P 500 rising 56.90 points (1.31%) for the week, roughly in line with its expected move of +/-53.19 points. Expected moves for the coming week are +/-53.82 (1.21%) for the S&P 500 and +/-294.55 (1.90%) for the Nasdaq. Options pricing for this week shows slightly more expensive put prices than equidistant call prices, while the same strikes for expirations one month from now show slightly more expensive call prices than equidistant put prices. This suggests that the market foresees modest further upside. S&P 500 and Nasdaq futures were down during their opening session overnight, falling by -20.25 (-0.45%) and -79.50 (-0.51%), respectively. VIX futures rose 0.305 to $16.30 (+1.89%) overnight. A slew of economic indicators and Fed speakers' comments will most likely add volatility in the week to come.

Technical analysis highlights: S&P 500 above 4,400 bullish trend, next resist at 4,540. Nasdaq 100 resistance at 15,561 & 16K. DAX above 15,280 resist, next 15,575 but rejected at 55 DMA, RSI still negative. EURUSD resistance at 1.0765. USDJPY likely to test 152.00, break above likely move to 153-154. Gold retraced to 1,933 could dip lower but expect rebound. Copper key support at 354.50. Bottom and reversal likely in Crude oil: Brent oil support at 78.20. WTI at 73.85. US 10-year T-yields could bounce to 4.80

Macro: Moody’s changed the outlook on the US Government ratings to negative from stable and affirmed the long-term ratings at Aaa. The rating agency said “the downside risks to the US' fiscal strength have increased and may no longer be fully offset by the sovereign's unique credit strengths. In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody's expects that the US' fiscal deficits will remain very large, significantly weakening debt affordability. Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.” The University of Michigan Sentiment Index fell more than expected to 60.4 from 63.8. However, both the 1-year and 5-10-year inflation expectations increased by 20 bps to 4.4% and 3.2%, respectively, contrary to street forecasts of a decline. The 5-10-year inflation expectation reached the highest level since March 2011.

In the news: Alibaba, JD.com withhold Singles’ Day sales tally for second year, but strike positive tone amid economic headwinds in China (SCMP), Moody's turns negative on US credit rating, draws Washington ire (Reuters), China weighs ending freeze on Boeing with 737 Max deal in US (Bloomberg), Iceland Braces for Volcanic Eruption That Could Wipe Out Town (Bloomberg)

Macro events (all times are GMT): ECB’s Guindos speaks (0815), OPEC publishes its Monthly Oil Market Report (During the day)

Earnings events: Tyson Foods reports FY23 Q4 (ending 30 September) earnings results ahead of the US market open with analysts expecting revenue growth of 0% y/y and EBITDA at $532mn down from $1.13bn a year ago.

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 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 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)
- Full disclaimer (https://www.home.saxo/en-mena/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.