Macro: Sandcastle economics
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Summary: Another day of selloff in megacap tech stocks amid mixed earnings, although Amazon and Intel rallied in late trading on earnings beat. Strong US Q3 GDP and a dovish outcome from the ECB meeting were mostly priced in, and dollar was sideways and started Friday’s Asian session on a backfoot. Yen still staying beyond the intervention threshold, while crude oil wobbles on war premium ebb and flows. US September PCE due today and earnings focus on energy companies and China banks.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
US Equities: Megacap technology stocks had another sell-off as investors expressed disappointment with the results and comments from the previous day. The Nasdaq 100 declined by 1.9% to 14,110, and the S&P 500 dropped by 1.2% to 4,137. Microsoft, Meta, Nvidia, and Tesla each fell by 3.5% or more. On the other hand, Amazon rallied over 5% in extended hours after reporting better-than-expected earnings, attributed to margin expansion. Intel saw a jump of over 7% on upbeat guidance regarding sales growth. Nasdaq 100 and S&P eMini futures rallied around 0.5% in early Asian hours.
Fixed income: Treasuries rallied sharply across the yield curve, despite stronger-than-expected GDP growth and durable goods orders. This was partly helped by a quarterly core PCE slightly below the consensus estimate and a slightly larger-than-expected print in initial jobless claims. The $38 billion 7-year auction attracted decent demand and came with a strong result. The 2-year yield finished 8 bps lower at 5.04%, and the 10-year yield declined 11 bps to 4.84%.
China/HK Equities: Market activities were muted as investors remained on the sidelines, assessing the magnitude of the impact of recent stimulus measures and the longer-term policy trajectory that may be unveiled by the upcoming high-level meetings of the Chinese authorities, starting with the National Financial Work Conference next week. The Hang Seng Index ticked down 0.2%, while the Hang Seng Tech Index edged up 0.3%. Li Ning plummeted by 21% after missing sales estimates in the sportswear maker's retail business. Standard Chartered Bank plunged 11% due to provisions for China-related loan losses. The CSI300 finished 0.3%, driven by a rally in autos and tech in the afternoon.
FX: Strong US GDP and a dovish ECB outcome could not propel the dollar materially higher, supporting the case that upside is starting to get limited as positioning is stretched. Dollar started the Asian session on a back-foot this morning, with AUDUSD climbing above 0.6330 from lows of 0.6270 yesterday and NZDUSD touching 0.5830 after pushing below the 0.58 handle yesterday to YTD lows. EURUSD moved back above 1.0550 despite economic concerns highlighted at the ECB meeting, as much of that was priced in. USDJPY still above 150 and intervention threat looms.
Commodities: Oil prices saw another sharp drop yesterday despite US economic data staying strong and ECB loosening its hawkish posture. However, demand outlook remains weak and war premium continues to wobble, bringing volatility in crude oil prices. Gold stays supported with yields slipping, dollar range-bound and safe-haven demand underpinning.
Macro:
Macro events: China industrial profits (Sep), US PCE (Sep) core exp 0.3% MoM vs. 0.1% prior
Earnings: Exxon Mobil, Chevron, Sanofi, Agricultural Bank of China, China Merchants Bank, China Molybdenum, ICBC, Ping An, Postal Savings Bank of China
In the news:
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