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: Trump-Trades and Tech Outages
Saxo
In a week peppered with political drama and a wider equity market correction, there was also plenty of action in the semiconductor space. Both ASML and TSMC reported earnings, Broadcom had a stock split, and Trump ignited further export restriction fears. Accordingly, we saw Saxo’s client base active in many major chip names. The Trump-Trade and rotation into small caps saw plenty of activity in US Indices and equivalent futures products. While gold futures were also heavily traded as the precious metal reached new highs before retracing at the end of the week.
Russell 2000 surge
This week saw a surge in US small cap index, the Russell 2000, which has been buoyed by the prospect of a Trump Presidency and the "Trump-Trade". The Micro e-mini Russell 2000 (M2K) future is how Saxo clients have been gaining exposure albeit with a relatively even split on longs vs shorts. The index saw a small pullback from the surge at the end of the week as volatility ticks up (more on Vix below).
The Russell 2000 Surge: Key Factors, Opportunities, and Risks
Volatility lifts as equity markets turn
Over the last 6 weeks, the VIX index has been rangebound, unable to break above 14. Meanwhile, we have seen new high after new high from various US indices. However, the last 2-3 trading sessions have seen US benchmarks come off and the VIX shoot up above 16, indicating elements of market turmoil. As a result, we see a lot of client activity managing US index exposure across various products. Times of rising volatility are good reminders for investors to refresh their risk management strategies.
Volatility insights for the smart investor
Global IT outage
Computer systems around the globe failed on Friday after a botched update took down elements of Microsoft’s systems. The outage has affected business from Airlines to Banks to TV stations and has reverberated into the stock market adding to weakness from previous sessions. Cybersecurity will be in focus as a result and markets will be assessing the economic impact of the event.
Massive global IT outage
Next week is a little quiet for economic data from the major economies. Friday does see the PCE Price Index in the US which will add to the data set painting the inflation picture. Earnings ramp up with a massive day on Tuesday 23rd July with results from Alphabet, Tesla, Microsoft and Visa just to name a few. Microsoft may delay as a result of today’s technical issue.
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