Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
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Key Stories from the past week: EU easing policy begins while US gets repriced
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The week wasn’t short of action with macro events boosting activity in products with exposure to rate changes. The ongoing AI frenzy saw clients add to positions in Nvidia, Salesforce, Microsoft, AMD and ASML. While US indices saw outflows as S&P500 and Nasdaq100 reach new highs.
Clients continue to add Nvidia positions
The higher Nividia shares climb the more investor attention it attracts. This is true at Saxo as this week NVDA:xnas saw the largest absolute position additions across our client base. The company’s market cap breached the $3 trillion mark and is now second only to Microsoft. The 10-for-1 stock split next week may improve optics for smaller investors wanting to get a slice of the action.
AI bonanza takes equities to new all-time highs
Reluctant cut from the ECB
The ECB’s hawkish cut and mixed US labour data has boosted client interest in yields, bonds and credit spread products as investors continue to reprice rate cut expectations from major Central Banks. We have seen increased client activity in various futures products that give investors exposure to global interest rate moves. Activity will no doubt continue next week with US inflation data and FOMC meeting.
Is the ECB playing with fire?
Clients feel new highs for US Indices are a bit frothy
Both the NASDAQ and the S&P500 reached new highs this week. And despite the technical update indicating potential for further gains, we see clients increasing short exposure for US indices. Clients are either taking profits at elevated prices or are dubious about the punchy valuations and think the uptrend could be stretched. Shorts could be rewarded today as Non-Farm Payrolls comes in much hotter than expected.
Technical Update - S&P500 and Nasdaq100
Things to look out for in the coming week include US CPI and a FOMC policy meeting, both on Wednesday. Following the surprise NFP numbers, the market is no longer pricing in a full rate cut before December. CPI will be the main event for markets to get a read on potential policy. Meanwhile, key earnings to watch are Autodesk (Mon), Oracle (Tue), Broadcom (Wed), and Adobe (Thu).
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