Global Market Quick Take: Europe – 1 November 2024

Global Market Quick Take: Europe – 1 November 2024

Macro 3 minutes to read
Saxo Be Invested
Saxo Strategy Team

Key points:

  • Equities: US markets fall on tech earnings; Apple slips, Amazon rises; Japan, Europe mixed; NFP awaited.
  • Currencies: Sterling sharply lower in follow-on reaction to new UK budget
  • Commodities: Gold sees mini correction on US data strength; natural gas slumps
  • Fixed Income: UK Gilt yields soar amid budget turmoil, Treasuries stable ahead of non-farm payrolls
  • Economic data today: US jobs report, ISM Manufacturing

The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.

Webinar replay: Trading the 2024 US election

Macro:

  • US September PCE was in line with expectations on the headline, rising 0.2% M/M, but accelerating from the prior 0.1% pace. Meanwhile, the Y/Y rose by 2.1%, in line with expectations while the prior was revised up to 2.3% from 2.2%. The core metrics saw a 0.3% rise M/M, in line with forecasts while the prior was revised up to 0.2% from 0.1%, while the Y/Y rose by 2.7%, matching the prior pace but above the 2.6% analyst forecast.
  • US initial jobless claims (w/e Oct. 26th) tumbled to their lowest since May, printing 216k from 228k, well below the expected 230k, despite an increase expected due to seasonal factors and recent hurricane impacts in Florida and elsewhere.
  • Eurozone Q3 GDP growth came in better than expected at 0.4% QoQ vs. 0.2% expected. Downside risks remain but this may prevent the need for ECB to go for a jumbo rate cut in December. US GDP data once more evidenced the continued ‘US exceptionalism’ theme with Q3 GDP up 2.8% YoY.
  • Eurozone Oct. Flash CPI came in hotter than expected for both headline and core, with the latter steady at 2.7% versus a drop to 2.6% expected.
  • NFP preview: Hurricanes and the Boeing strike effects will be in focus, and consensus for headline jobs growth is at +100k from 254k previously with unemployment rate remaining unchanged at 4.1%. Sentiment is shaky with tech earnings misses and any upside surprises could question the next Fed move and may push out the expectations of a rate cut in November.

Macro events (times in GMT):  Switzerland Oct. CPI (0730), US Oct Nonfarm Payrolls Change and Unemployment Rate (1230), US Oct ISM Manufacturing (1400)

Earnings events:

  • Today: Exxon Mobile, Chevron
  • Next week: Berkshire Hathaway, Palantir, Qualcomm, Arm, Vertex Pharmaceuticals, Arista Networks, Gilead, Airbnb, Constellation Energy

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities: US markets saw significant declines, with the S&P 500 dropping 1.8%, Nasdaq 100 down 2.4%, and Dow shedding 378 points, primarily driven by disappointing guidance from Microsoft and Meta, which highlighted high costs associated with AI investments. In corporate earnings, Apple beat revenue and EPS estimates but reported lower net income due to a tax charge, leading to a 2% drop in after-hours trading. Amazon’s results exceeded expectations on both earnings and revenue, lifting its shares by 5% post-market. Japanese markets slipped 0.5% following US tech earnings, with chip stocks like Hitachi and Renesas underperforming despite strong gains by Advantest on AI demand. In Europe, shares declined amid mixed earnings and inflation concerns, with Microsoft and Meta's outlooks impacting tech shares such as SAP and ASML.

Volatility: The VIX rose 13.81%, reaching 23.16, indicating increased market caution. The VIX1D, a measure of one-day volatility, jumped 41.01%, signaling heightened short-term uncertainty. Implied volatility remains elevated as the SPX and NDX are set for potential moves of 52.81 points (0.93%) and 254.27 points (1.28%), respectively, based on options pricing. Notable options activity includes MSFT, META, and INTC, reflecting the impact of earnings. Today, the release of Nonfarm Payrolls (NFP) data is expected to be a critical factor influencing market sentiment, as investors look for clues on economic resilience amidst inflationary pressures and potential Fed rate adjustments.

Fixed Income: UK markets saw another day of turmoil as gilts dropped, with 2-year and 10-year yields both hitting 4.53%, driven by reduced expectations of BOE rate cuts after the government’s Autumn budget. Bunds, OATs and BTPS held steady, outperforming gilts. U.S. Treasuries ended slightly higher yesterday, recovering from earlier losses caused by a selloff in UK gilts. The gains were led by longer-term bonds, flattening the yield curve. Economic data, like lower jobless claims and the PCE index, had little impact on the market, as traders focused more on European developments. Today market’s focus is on the nonfarm payrolls ahead of next week’s FOMC meeting.

Commodities: Gold's near USD 60-dollar correction yesterday was triggered by profit-taking amid a less dovish Fed. This shift, following a string of strong US economic data, temporarily removed focus from political concerns—including Trump's policies and their potential effects on debt and inflation. Silver mirrored gold, falling more than 3% before reaching a key support level that managed to attract fresh buying. US natural gas extended its weekly decline to over 12% as stockpiles rose above the five-year average amid warmer weather forecasts, indicating sluggish demand for heating fuel. Crude oil found support from strong US economic data, China's stimulus, and Iran’s threat of an imminent retaliatory strike against Israel. The focus now turns to the US jobs report and the countdown to Tuesday's US election.

Currencies: Sterling was the chief focus in FX as it dropped sharply in a follow-on reaction to the UK budget unveiled on Wednesday. The Euro/Sterling exchange rate rose through the important 0.8400 area (a prior major cycle low from the summer) as the market sees the heavy spending in the budget as possibly stagflationary, judging from the sharp rise in UK rates all along the UK yield curve and the sell-off in the currency and the country’s equity market. Elsewhere, the USD was sideways ahead of today’s October jobs report and next Tuesday’s election, as well as the Thursday FOMC meeting next week.

For a global look at markets – go to Inspiration.

Quarterly Outlook

01 /

  • Macro Outlook: The US rate cut cycle has begun

    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...
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    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...
  • FX Outlook: USD in limbo amid political and policy jitters

    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 ...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    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...
  • Equities: Are we blowing bubbles again

    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...
  • Macro: Sandcastle economics

    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...
  • Bonds: What to do until inflation stabilises

    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 ...
  • Commodities: Energy and grains in focus as metals pause

    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...

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)

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992