Global Market Quick Take: Europe – 9 January 2025

Global Market Quick Take: Europe – 9 January 2025

Key points

• Equities: Mixed session, tariff concerns, earnings impact, Fed policy, Japan wages
• Volatility: Elevated, VIX at 17.70, options active, Nvidia/Tesla focus, implied moves rising
• Digital Assets: Bitcoin $94,303, Ethereum $3,323, liquidations $500M+
• Currencies: USD surges on a story suggesting sweeping Trump tariffs, GBP weaker as UK yields rise sharply.
• Commodities: Gold steadies with resistance at USD 2665, crude futures hit highs then retreat on mixed demand signals.
• Fixed Income: US treasury yields fall back after a charge higher on fresh Trump tariff concerns.
• Macro events: US markets closed, Eurozone Retail Sales

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

Macro data and headlines

• China Dec. CPI rose only 0.1% YoY as expected and vs. 0.2% in November and the PPI fell-2.3% vs. -2.4% expected and -2.5% in November as the country teeters on the edge of deflation.
• UK Dec. BRC Shop Price Index fell -1.0% YoY vs. -0.4% expected and -0.6% in Nov.
• CNN reported yesterday that President-elect Donald Trump may declare a national economic emergency to justify broad tariffs on allies and adversaries. This would enable him to use the International Economic Emergency Powers Act to manage imports during the emergency.
• According to the ADP Payrolls data released yesterday, US private businesses added 122K workers, the lowest in four months, down from 146K in November and below the 140K forecast. Annual pay growth for job-stayers slowed to 4.6%, the lowest since July 2021, while job-changers saw a slight decline to 7.1%.
• US initial jobless claims dropped by 10,000 to 201,000 for the week ending January 4, the lowest in eleven months, defying expectations of 218,000. The 4-week average fell to 213,000. Outstanding claims rose by 23,000 to 1,867k below the 1,870k forecast.
• The December FOMC minutes indicated increased inflation risks from strong data and policy changes. Officials expected inflation to reach 2% but noted potential delays, with some suggesting slowing policy easing.

Macro events (times in GMT)

Eurozone Nov. Retail Sales (1000), Mexico Dec. CPI (1200), US Dec. Challenger Job Cus (1230), US Fed’s Harker, non-voter, to speak (1400), US Fed’s Collins, voter, to speak (1405), US Fed’s Barkin, non-voter, to speak (1700), US Fed’s Schmid, voter, to speak (1830), US Fed’s Bowman, voter, to speak (1835)

Earnings events

• Friday: Constellation Brands, Delta Airlines, Walgreens Boots
• Next week: JPMorgan Chase, Taiwan Semiconductor Manufacturing, UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Goldman Sachs, Blackrock, Citigroup, Schlumberger

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

Equities

• US: US futures edged lower early Thursday following a mixed trading session on Wednesday, where the Dow and S&P 500 rose 0.25% and 0.16%, respectively, while the Nasdaq slipped 0.06%. Minutes from the Federal Reserve's December meeting indicated a cautious stance on policy easing, with members highlighting inflationary risks, amplified by potential protectionist policies under President-elect Trump. A Treasury auction eased recent yield spikes, stabilizing the bond market. On the corporate front, eBay shares surged 9.9% after integration news with Meta's Marketplace, while Boston Scientific rose 4.3% following an acquisition announcement. Moderna fell 9.2% on a price target downgrade, and Edison International dropped 10% amid California wildfire concerns.

• Europe: European stocks reversed early gains on Wednesday, with the Stoxx 50 down 0.31%, as economic and trade concerns resurfaced. Reports of President-elect Trump considering a national economic emergency for tariffs weighed heavily on sentiment. Economic data showed declining retail sales and factory orders in Germany, alongside weak Eurozone sentiment, marking the lowest levels since 2020. LVMH, ASML, and BMW all posted losses exceeding 1.5%. However, TeamViewer climbed 13% after exceeding 2024 revenue targets, and Vallourec surged over 7%, hitting a multi-year high after achieving its debt reduction goals ahead of schedule.

• Asia: Asian equities were mixed on Thursday. Japan's Nikkei 225 fell 0.8% as strong wage growth fueled concerns about the BOJ's tightening policy. In Hong Kong, the Hang Seng snapped a three-day losing streak, rising 0.5% as Chinese authorities announced subsidies to boost consumer spending and industrial upgrades. Meanwhile, Chinese stocks fell slightly as inflation data disappointed, with consumer prices flat in December and producer prices shrinking for a 27th consecutive month. South Korea's KOSPI rose 1.1%, driven by Samsung Electronics' 2.7% gain despite weaker-than-expected earnings.

Volatility

Volatility remains elevated, with the CBOE VIX closing at 17.70 after touching 19.50 earlier. The options market saw heightened activity in quantum computing names, reflecting significant sector volatility. Expected moves for the S&P 500 increased to 51.30 points (~0.87%), while the Nasdaq 100's implied volatility suggests a 251.10-point range (~1.19%). Nvidia, Tesla, and Palantir continue to dominate options trading as investors navigate rate uncertainty and broader market swings.

• US Treasury yields edged back lower after the 10-year treasury benchmark yield challenge the highs of 2024 near 4.73% without surpassing it. The 20-year benchmark yield was the first part of the yield curve to touch 5% since 2023, and the 30-year benchmark made a charge above 4.95% before falling back, with a strong US treasury auction of 30-year T-bonds late yesterday.
• UK Gilt yields rose sharply all along the curve, with the 5-year benchmark posting a new high since late 2023 above 4.50% despite a strong auction of UK 5-year debt yesterday. The 30-year rose some 10 basis points to 5.35%, the highest level since 1998.




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Commodities

• Gold has steadied after a two-day advance with some short-term resistance emerging above USD 2665, this following mixed economic data and after the latest FOMC minutes mentioned the upside risk to inflation. Haven demand has so far been a major focus, driven by an unpredictable Trump heading for the White House, sticky inflation and worries about fiscal stability as US Treasury yields rise. Overall, this focus has benefitted not only gold but also other metals such as silver, copper and platinum.
• Crude futures touched three-month highs before suffering a near 3% setback, highlighting two-way risks where the upside is supported by declining US stockpiles, reduced flows from Russia, while sellers focus on weak China demand, and an unpredictable Trump heading for the White House.

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Currencies

• The US dollar rose sharply on the CNN story suggesting Trump would like to institute broad tariffs on day one of his administration. USDJPY only poked to marginal new local highs without holding as US treasury yields likewise eased back from fresh highs.
• GBP suffered a broad drubbing, with GBPUSD hitting a new low at 1.2321, with the focus on the April 2024 low just above 1.2300 as UK gilt yields rose sharply, suggesting a stagflationary outlook for the country. The important EURGBP cross for sterling jumped above 0.8325-area resistance, with the next focus on the 0.8400-0.8450 zone.
  

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