Global Market Quick Take: Europe – 22 November 2024

Key points:

• Equities: US and European indices gained, while Asian markets rose on chipmaker strength
• Volatility: Short-term volatility eased, with VIX1D and VIX9D falling below VIX levels
• Currencies: The dollar is heading for an eight-weekly advance, led by euro losses
• Commodities: Best week since April led by energy and precious metals
• Fixed Income: U.S. Treasury yields rise, OAT-Bund spread widens on political volatility
• Macro events: Eurozone, UK and US Manufacturing PMIs

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

Macro data and headlines:

• Japan October Core CPI, excluding fresh food and energy, rose 2.3%, slightly above the 2.2% forecast, but slowing from last month’s figure of 2.4%. Despite this, core inflation has been above 2% for the past 2 years, contributing to the central bank more hawkish stance this year and keeping the December BOJ meeting alive.
• US Initial jobless claims came in at 213,000, slightly below expectations of 220,000 but the figure has been hovering just above 200,000. Philadelphia Fed Manufacturing Index in November came in weaker than expected at 05.5 vs 7.4 expected.

Macro events (times in GMT): France (0815), Germany (0830), Eurozone (0900), and UK (0930) Nov Manufacturing PMI’s, US Nov Manufacturing PMI (1445), US Nov University of Michigan Sentiment (1500).

Earnings events:

• Today: Buckle, Global Blue Group Holding, Sunlands Tech, Meituan
• Next week: Dell, CrowdStrike Holdings, Workday, Autodesk, Hewlett Packard, Best Buy
  

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


 

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Equities:

• US: US markets rose as the S&P 500 gained 0.53% and the Dow Jones climbed 1.06%, led by cyclicals like Salesforce (+3.09%) and IBM (+3.6%). Snowflake surged 32.7% on its strongest earnings report yet, while MicroStrategy fell 16% after Citron Research’s short call and plans to issue convertible notes to purchase Bitcoin.
  (read more about MicroStrategy here: Market on edge - MicroStrategy - a speculative bet on bitcoin or strategic genius )
• Asia: Asian markets advanced, supported by gains in chipmaking and cyclical stocks. Japan’s Nikkei 225 rose 1.2%, while South Korea’s KOSPI added 0.8% as Nvidia suppliers tracked strength in US markets. However, broader risk appetite remained subdued due to geopolitical tensions, with Hong Kong’s Hang Seng down 1.72%, pressured by Alphabet's regulatory challenges.
• Europe: European stocks rebounded, with the Stoxx 50 rising 0.6% and Stoxx 600 up 0.5%. Tech stocks like ASML (+2.5%) and SAP (+1.9%) led gains, supported by Nvidia optimism. Insurers such as Allianz (+2%) and Munich Re (+2%) also performed strongly. JD Sports plunged 15% after warning profits would fall at the lower end of guidance.

Volatility: Short-term volatility eased, with VIX1D falling to 13.84 and VIX9D at 14.15, both below the VIX (16.87). VIX futures rose slightly, reflecting some caution. Expected moves for the S&P 500 (0.58%) and Nasdaq 100 (0.80%) normalized. Among the most active options, MicroStrategy continued to see high interest, while SOFI stood out for its broader financial services focus.

Fixed Income: U.S. Treasury yields ended the day near session highs, with the 10-year yield closing around 4.42%, just below an intraday peak of approximately 4.44%. The risk-on sentiment in the market, fuelled by a rebound in equities—including a 0.8% gain in the S&P 500—and a 2% rise in WTI crude prices, exerted upward pressure on yields. Short-term Treasuries faced the sharpest losses as traders reassessed expectations for Federal Reserve rate cuts, leaving the odds of a 25-basis-point cut in December balanced at 50/50. In Europe, German Bund yields declined by 4 basis points to 2.32%, as traders increased bets on significant monetary easing from the European Central Bank, with expectations of a 30-basis-point rate cut in December and up to 140 basis points of cuts by the end of 2025. Despite this, France’s 10-year yield spread over Germany widened for a fourth consecutive session, reaching its highest level in over a month amid renewed concerns about French budget negotiations and political risks following comments from far-right leader Marine Le Pen.

Commodities are heading for their strongest week since April, with gains seen across all sectors. The overall supporting theme includes rising Russia–Ukraine tensions, which are bolstering crude oil and precious metals. Additionally, the outlook for colder weather has increased natural gas demand, especially in the US, where prices are up 13% this week. Gold continues at a rapid pace to retrace the early November correction, as geopolitical concerns feed fresh momentum. The next level to watch is USD 2,693. Arabica coffee reached a fresh 13-year high near USD 4 per pound due to mounting supply concerns in Brazil after drought reduced the potential output for the 2025 season.

Currencies: The US dollar trades higher for an eight straight week on broad gains against its major peers with the Bloomberg Dollar Index heading for its highest weekly close in two years. The index has climbed over 2% this month, adding to the nearly 3% jump last month, amid escalating geopolitical concerns in Europe and widening yield and interest rate gaps favoring the greenback. The dollar rose amid volatile trading and rising Treasury yields. The yen initially strengthened as inflation data supported rate hike hopes before turning lower again ahead of the European session as the EURUSD fell to a session low of 1.0462, marking its weakest level since October 2023. Hotter than expected UK CPI earlier this week failed to sustain a sterling rally, suggesting a concern that sustained high BoE rates are not necessarily supportive of the currency if the UK is suffering mild stagflation.

For a global look at markets – go to Inspiration.