Global Market Quick Take: Europe – 4 November 2024

Macro 3 minutes to read
Saxo Be Invested
Saxo Strategy Team

Key points:

  • Equities: Strong Amazon lifts US, Europe rises on bank gains, Asia steady ahead of U.S. election.
  • Currencies: USD on the defensive after a weak jobs report and ahead of tomorrow’s election
  • Commodities: WTI crude nears $71 as OPEC+ delays December production, Gold and Silver steady ahead of US elections.
  • Fixed Income: Yields continue to fluctuate amid market uncertainty
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 Oct. Nonfarm payrolls change came in at +12k vs. +100k expected and the revisions to the prior two months of payrolls was -112k. Some noted the not fully quantifiable impacts of the hurricanes that hit populated areas in Florida, though the impact of striking Boeing workers was known and seen in the -46k decline in manufacturing payrolls for the month.
  • US Oct. Unemployment rate steady at 4.1% as expected
  • US Oct. ISM Manufacturing was reported at 46.5 vs. 47.6 expected and 47.2 in September, with the Prices Paid index jumping to 54.8 vs. 50.0 expected and 48.3 in September.

Macro events (times in GMT):  US Sep. Factory Orders (1500), US 3-year Treasury Auction (1800), China Oct. Caixin PMI (0145), Australia RBA meeting (0330) US Election tomorrow.

Earnings events:

  • Today: Vertex Pharmaceuticals, Palantir, Constellation Energy
  • Tuesday : Marathon Petroleum, Coca-Cola European
  • Wednesday : Qualcomm, Arm, Gilead, MercadoLibre
  • Thursday : Arista Networks, Airbnb, Motorola
 

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

Equities:

  • U.S. stocks rose on Friday, boosted by strong Amazon and Intel earnings despite a weak jobs report. The S&P 500 climbed 0.41%, while the Nasdaq gained 0.72%, and the Dow rose 0.69%, with notable gains in Boeing, Chevron, and Microsoft. Apple, however, fell following its earnings release. Investors now focus on a potentially turbulent week ahead with both the U.S. presidential election and a key Fed meeting. ExxonMobil reported Q3 earnings of $1.92 per share, exceeding expectations but reflecting lower year-to-date results due to weak refining margins. Berkshire Hathaway, meanwhile, trimmed its Apple holdings significantly, taking its cash reserves to a record high.
  • In Europe, markets rebounded on Friday, with the STOXX 50 and STOXX 600 each gaining over 1%, trimming weekly losses as strong U.S. earnings lifted sentiment. The banking sector led gains, while Maersk saw a 4.4% jump following target price upgrades. However, the yen’s recent strength weighed on Japan’s Nikkei 225, which declined by 2.63% on Friday, as tech and export stocks sold off.
  • In Monday’s Asian session, stocks traded cautiously. The Shanghai Composite rose 0.53% and the CSI300 added 0.72%, buoyed by strong auto sales, with BYD climbing 4.4%. The Hang Seng Index in Hong Kong edged up 0.11%, with travel stocks like Trip.com surging 5.9%, though property stocks saw profit-taking. Hong Kong markets remain on edge ahead of the U.S. election, with U.S.-China trade relations a focus.

Volatility: The VIX is at 21.88, down 5.53%, reflecting a slight easing in volatility as markets await this week’s high-stakes events. The one-day VIX1D spiked 41% to 19.22, reflecting immediate event-driven uncertainty. Expected moves for the week are notably elevated, with implied moves at 2.53% for the SPX and 3.10% for the NDX, signaling investor caution. The put/call ratio stands at 1.61, the highest since early August, indicating increased hedging as traders position for potential market turbulence around the U.S. election and Fed decision. The Fed’s rate decision on Thursday could add to the volatility, particularly if it deviates from market forecasts.

Fixed Income: UK gilts stabilized on Friday following the selloff caused by the UK Autumn Budget, with the 10-year yield settling at 4.44%, down from a peak of 4.53% during the week. Expectations for BOE rate cuts were adjusted to 95bps by the end of 2025, compared to 125bps a week earlier, with a 21bps cut anticipated this Thursday. German bonds saw the two-year yield dip to 2.25%, and the yield curve steepened as 10-year Bund yields rose to 2.40%. Meanwhile, US Treasury yields climbed to their highest levels in months, erasing earlier gains from weak but distorted October jobs data. This increase reflected caution ahead of key events, including refunding auctions, the US presidential election, and the Fed’s rate decision, with the 10-year yield reaching 4.36% on Friday, the highest since July.

Commodities: WTI crude climbed toward $71 per barrel on Monday, marking a fourth consecutive session of gains as OPEC+ delayed its December production plans, aiming to stabilize prices and prevent oversupply amid demand uncertainties. Renewed Middle East tensions further supported oil prices, with Iran signaling a potential "crushing response" to Israel, possibly timed after the U.S. election but before the January inauguration. Meanwhile, Brent crude rose to $73.1. Gold remained steady at $2,750 as investors assess safe-haven demand and the Fed's policy outlook ahead of the election, while silver held around $32.49, close to a two-week low.

Currencies: Sterling stabilized Friday after the steep run lower on the announcement of the autumn budget, but long UK gilts bear watching this week for whether the bond market will continue to revolt on the fiscal outlook for the country, which would spill over into sterling if yields continue to rise. Elsewhere, the US dollar sold off in the Asian session to start the week after a strong finish on Friday, seemingly as Trump’s odds of winning have faded sharply in betting markets. The US election is tomorrow.

For a global look at markets – go to Inspiration.

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