Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
You can access both of our platforms from a single Saxo account.
Weekly Update: Saxo Thematic Investing Performance
Peter Garnry
Chief Investment Strategist
Summary: The commodities basket was the best performing theme basket last week up 5.9% driven by strong performance across the energy stocks due to the OPEC+ decision last week to cut production by 2mn barrels per day. At the other end of the spectrum all of our green baskets (energy storage, renewable energy, and green transformation) were the worst performing baskets. We have also added a nuclear theme basket to be able to track the interest of this energy source as the energy crisis has clearly put nuclear power back on the map for investors.
Commodities show strength on OPEC+ and weaker USD
The best performing theme basket last week was commodities up 5.9% driven by strong gains across the whole sector as OPEC+ decided on Wednesday last week to cut production by 2mn barrels per day. In addition, the USD showed signs of weakness although the currency back during the week. Themes exposed to the physical world are still our preferred themes and they include commodities, defence, logistics, and renewable energy.
It was the energy companies that delivered the strongest gains in the commodities basket with the best performing stock being Canadian Natural Resources up 17.2% which has a higher sensitivity to oil prices given its higher cost per barrel metrics for its oil sand assets at around $30/brl. The oil company has assets with a long asset-life and low maintenance requirements, on top of a competitive advantage in a world hungry for more oil in the short-term. The company reports Q3 results on 31 October with analysts expecting revenue at CAD 10.6bn down from CAD 11.5bn in Q2 but still up 37.8% y/y. Free cash flow is expected to remain strong in the years to come with CAD 13.5bn expected in 2023 compared to an enterprise value of CAD 97.6bn.
The green baskets were having a red week
All of our green baskets, energy storage (batteries, fuel cells etc.), renewable energy (production of green energy), and green transformation (companies using green energy) were underperforming last week and it has been a trend that we have observed for some time. The disruption in the European energy markets, specifically the electricity markets, is causing a headache for the industry because of pricing regulation making it more difficult to assess asset valuations. In the green transformation basket the EV makers have been under pressure due to enormous input cost pressures from high lithium and aluminum prices.
Nuclear power theme added
We have also added a nuclear theme basket which consists of companies within uranium mining, operation of nuclear power plants, and companies selling technology related to nuclear power. The basket is one way to express investor sentiment on nuclear power, but it is important to note that it is a difficult theme to construct a pure and good exposure profile around. We have also decided to remove the crypto & blockchain and 3D printing theme baskets from our core themes and thus our performance tables because both themes are small and very niche. Both themes are still available on our trading platforms under research for inspiration, but they are no longer part of our overview of themes to digest flows in the market.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...