Global Market Quick Take: Europe – 12 December 2023 Global Market Quick Take: Europe – 12 December 2023 Global Market Quick Take: Europe – 12 December 2023

Global Market Quick Take: Europe – 12 December 2023

Macro 3 minutes to read
Saxo Strategy Team

Summary:  Shares in Asia rose overnight with small gains also seen in US and European equity futures ahead of US CPI and central bank meetings. This follows a cautious session on Wall Street Monday where small gains were realised despite weakness among the ‘Magnificent 7’ where Meta slipped 2.2% and Nvidia slid 1.85%. In China an important meeting of Chinese economic policy makers may give clues about additional measures to boost the economy next year. Elsewhere, traders will look towards US CPI print and Wednesday’s FOMC meeting for confirmation the rate hike cycle has ended. Gold weighed down by long liquidation with crude oil receives a small boost after Houthi missile hits tanker in the Red Sea.


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

Equities: Positive sentiment in most Asian equity markets overnight with US and European equity futures pointing slightly higher in early trading hours. Today’s key events are German December ZEW Survey (1000 GMT) expected to show stabilisation in Europe’s largest economy and most important the US November CPI (1330 GMT) figures because the market’s current rally is pinched on the idea of further declines in inflation without slipping into a recession. The VIX Index closed at 12.63 yesterday signalling calm expectations for the rest of December. Oracle reported earnings last night hitting estimates which was not enough to please investors sending its shares down almost 9% in extended trading.

FX: The dollar traded sideways on Monday but was weaker in Asia today with renewed JPY weakness being offset by gains across the other major peers, most notably AUD and NZD on expectations China stimulus announcements from key policy meeting underway.  USDJPY rose back above 146 after the BOJ said that it sees little need to end negative rate in December after traders had started to pile into hawkish BOJ bets. Markets await the US CPI today and Fed announcement on Wednesday

Commodities: Brent crude found support at $75 before bouncing after an attack on a tanker in the Red Sea from Houthi-controlled Yemen raised fears of disruptions to shipping due to the ongoing Israel-Hamas war. Also focus on monthly oil market reports from EIA today followed OPEC and IEA later in the week. Gold briefly plunged below $1980 as speculators, the main drivers behind the recent rally, cut longs amid a short-term deterioration in the technical outlook with all eyes on US inflation data and Fed announcement. Meanwhile, Copper declined despite concerns of a supply deficit going into 2024, as China’s deflation and underwhelming fiscal stimulus underpinned and focus turns to growth target and other announcements from Central Economic Work Conference today along with the US CPI.

Fixed income: Yesterday’s 3-year and 10-year auctions caused a selloff across maturities in the yield curve. Bidding metrics in the 3-year auction were extremely weak, with primary dealers being left with 26.2% of the issuance, the most since October 2022. Demand for the 10-year benchmark was better, but the auction tailed by 1.4 basis points. Today, the U.S. Treasury is selling 30-year bonds on the back of the U.S. CPI release. It can be a volatile week for sovereigns across the Atlantic, with the Federal Reserve, the European Central Bank, and the Bank of England meeting for the last time this year.

Macro: NY Fed survey showed cooling inflation expectations, with one seen at 3.4% vs. 3.6% prior, the lowest since April 2021. The three-year ahead was unchanged at 3% and the five-year ahead was unchanged at 2.7%. RBA Governor Bullock said this morning that Australia is not falling behind other countries in the fight against inflation, and that the bank will take a cautious approach with policy, keeping data on the radar. The 2023 Central Economic Work Conference, currently underway in China, will set the policy agenda for 2024 — a critical year that could determine the medium-term growth path. The annual year-end conference will address many familiar issues — like how to support growth, confidence and the property market — but the pressure will likely be more intense compared to prior meetings.

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 strong support at 1.0760-1.0730. 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 broken rebounding from 1,975.  WTI Crude oil support at 67. Brent support at 71.93. 10-year T-yields could bounce to 4.35 resistance

In the news: Hasbro to lay off 900 more employees amid weak toy sales (Reuters), New COP28 draft text does not mention phase out of fossil fuels (Reuters), Semiconductor giants race to make next generation of cutting-edge chips (FT), The world’s copper supply is suddenly looking scarce (Mining.com), Google’s Epic Legal Defeat Threatens $200 Billion App Store Industry (Bloomberg), Cruise missile from Yemen strikes tanker ship - US military (Reuters)

Macro events (all times are GMT): UK Employment (0600), EZ & German ZEW (0900), US NFIB (1000), US Nov CPI (tune in to our Macro podcast to know more) exp. 0% MoM, 3.1% YoY & 4% core vs 0%, 3.2% & 4% (1230), EIAs Short-term Energy Outlook (1600), Japanese 4Q Tankan Report (2200)

Earnings events: Key earnings releases today from Carl Zeiss Meditec (pre-mkt) and Johnson Controls International (bef-mkt).

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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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-sg/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 Markets 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 Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

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 such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website 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 intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.