Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Trader Strategy
Summary: The S&P 500 touched the 5k mark, driven by gains led by tech stocks, and the Nasdaq 100 also closed at record highs. In after-hours trading, Disney rose by more than 6%, and Arm Holdings surged by 38%, fueled by strong earnings, while Softbank is set to report today. However, China sentiment moderated again as there was a lack of follow-through on support measures, and focus will be on the inflation report today. Bond markets were choppy amid mixed NYCB headlines and a strong 10-year auction, keeping the dollar sideways. On the currency front, AUDNZD, however, broke below the key 1.07 support.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
US Equities: The Nasdaq 100 and the S&P 500 reached new highs, closing 1% and 0.8% higher at 17,755 and 4,995, respectively, driven by broad-based gains. In after-hours trading, Walt Disney surged by 6.6% after reporting earnings that surpassed expectations. Arm Holdings also experienced a notable surge of more than 25% after raising its full-year guidance and offering upbeat comments on the outlook of the semiconductor industry.
Fixed income: Treasury yields edged modestly higher by around 2 basis points across the yield curve, with the 2-year yield and the 10-year yield settling at 4.43% and 4.12%, respectively. The auction of $42 billion of 10-year notes saw robust demand.
China/HK Equities: The Hang Seng Index pulled back from yesterday’s strong gains as skepticism persisted regarding the sustainability of a state intervention-driven rally in the mainland A-share market. The Hang Seng Index slid 0.3% to 16,082, and the Hang Seng Tech Index dropped by 1.6%. In the mainland, the CSI300 Index extended its gains, rising 1% to 3,344, and The Shanghai Composite Index added 1.4% to 2830. Today marks the last trading day of the A-share market before the six-trading-day-long Lunar New Year holiday.
After the Hong Kong market closed, Alibaba reported results largely in line with analyst estimates. For the December quarter, revenue rose 5.1% Y/Y to RMB260.3 billion, while adjusted net income fell 4% to RMB48.2 billion, and adjusted EPS dropped by 2% to RMB0.19 per ADS. The e-commerce giant also announced an increase in its share buyback program by USD 25 billion, bringing the total outstanding commitment to USD 35.3 billion over the next three years, or nearly 18% of the market cap. However, investors expressed concerns about the management’s remark regarding a substantial increase in investments in the Taobao and Tmall segments. Alibaba’s ADS dropped by 5.9% to USD 73.64, equivalent to a 3.9% decline versus the closing level in Hong Kong on Wednesday.
FX: Dollar traded sideways amid lack of key data in the US and Fed commentaries mostly priced in, while choppy yield moves underpinned amid mixed NYCB headlines. CHF was the G10 underperformer after SNB forex reserves rose for the second consecutive month in January, which sparks potential talk of currency interventions. USDCHF surged to YTD highs of 0.8750 with EURCHF zooming past 0.94. Kiwi retained its strength following a jump above 0.61 post employment data release yesterday, while AUDUSD unable to push above 0.6540 as AUDNZD breaks below the key 1.07 support. EURUSD maintained a slight upward bias, but stalled at 1.0780 for now and ECB’s economic bulletin will be in focus today.
Commodities: US natural gas closed below $2 as winter demand slowed and heating season is seen coming to a close. Crude oil, however, rose for a third consecutive day amid signs of stronger demand as US gasoline inventories fell more than expected. EIA reported a decline of 3.15mn barrels last week in gasoline inventories while distillate stocks dropped by 3.2m barrels. Our Commodity Strategist discusses his views on crude oil and fuel market in this article. Gold was steady amid gyrations in yields, and is still awaiting a clearer rate cut path to start showing strength.
Macro:
Macro events: US Treasury 30-year auction, China CPI (Jan) exp. -0.5% YoY vs. -0.3% prev., ECB Economic Bulletin, RBI and Banxico Policy Announcements. Speakers: BoE’s Dhingra, Mann; ECB’s Elderson, Lane; Fed’s Barkin.
Earnings: L’Oreal, AstraZeneca, S&P Global, Siemens, Philip Morris, ConocoPhillips, Unilever, SoftBank, NTT,
In the news:
For all macro, earnings, and dividend events check Saxo’s calendar.
For a global look at markets – go to Inspiration.
Disclaimer
The Saxo Bank 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. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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-gb/legal/disclaimer/saxo-disclaimer)