Global Market Quick Take: Europe – 30 April 2024

Key points:

• Equities: Positive sentiment continues. Strong Q1 results from Adidas and Samsung.
• FX: Yen volatility surges on suspected intervention, second round likely
• Commodities: Oil retreats on peace talks, copper jumps to fresh highs, gold is retreating
• Fixed Income: Bond markets dismiss higher-than-anticipated QRA financing estimates.
• Economic data: EZ GDP/CPI

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

Equities: Japanese equities are extending their momentum again today up 1.4% with European and US futures pointing slightly higher. China April PMI Manufacturing at 50.4 beats estimates of 50.3 suggesting the Chinese manufacturing sector is improving. Samsung Q1 result beats estimates on revenue and forecasts a positive second half on generative AI demand. Adidas Q1 results beat on all parameters as Samba demand fuels turnaround case. HSBC is also reporting strong earnings this morning while announcing a stronger-than-expected buyback programme on top the CEO surprisingly stepping down. Focus in the US session on earnings from Eli Lilly, McDonald’s, and Coca-Cola ahead of the US trading session, and later tonight after the close Q1 earnings from Amazon and AMD.

FX: Dollar resumed its ascent in the Asian session today after a volatile day in FX markets yesterday amid suspected attention in JPY. USDJPY has partially faded the move, and it is testing a break above 157, but risk of another round of intervention remains if MOF/BOJ want to push out speculators further while structural weakness for the yen remains. Back in 2022 as well, Japanese authorities intervened on two consecutive days. AUDUSD also pushed lower to drop below 0.6530 after being rejected at 0.6585 as Australia’s retail sales came in below expectations. Focus is also shifting to the FOMC meeting and the high bar for Chair Powell to surprise hawkish. NZDUSD ran into fibo retracement at 0.5980 and reversed all the way to 0.5940. EURUSD was mostly sideways despite higher inflation prints in Germany and Spain and focus turns to EZ GDP and inflation is due today. Momentum in GBPUSD continues, as it rose to 1.2560+ amid sustained equity momentum. To read more on our weekly FX views, go to this Weekly FX Chartbook.

Commodities: Crude oil prices continue to retreat amid signs of progress towards a ceasefire between Israel and Hamas reducing the geopolitical risk premium on crude oil. Brent Crude is trading around the 88.22/brl level this morning. It might lower some of the geopolitical premium, but focus still also on attacks on energy infrastructure in both Russia and Ukraine. Focus may shift to macro dynamics in the next few days with FOMC meeting due, and demand outlook will be key. Meanwhile, copper prices continued their ascent to reach fresh highs with Codelco, Chile’s state-owned miner, reporting a decline in quarterly output at its aging mines. Gold is sideways and focus is on whether Chair Powell makes a hawkish pivot. Gold is turning lower this morning trading around the 2,322 level as fears over Chinese currency devaluation and inflation are likely easing.

Fixed income: Higher energy costs have led to a rise in German annual inflation data. However, the European sovereign bond market has largely overlooked these figures, anticipating tomorrow's release of the Eurozone headline CPI figures. These are expected to remain steady at 2.4% for the first time this year, while the core CPI is projected to decrease from 2.9% in March to 2.6% in April. Italian BTPs have outperformed peers, with 10-year yields dropping to 3.86%. Meanwhile, German Bunds ended the day with yields down by 4 basis points at 2.53%. In the U.S., higher-than-anticipated QRA financing estimates for the second and third quarters did not significantly impact investor sentiment, with ten-year U.S. Treasury yields closing around 4.63% after dipping to 4.61% earlier. Attention is now turning to the forthcoming Treasury issuance plan, which is expected to reveal steady coupon issuance and an increase in T-bill issuance.

Macro: Japanese Retail Sales/Industrial Output (Mar), Chinese NBS PMIs (Apr), Chinese Caixin Manufacturing Final PMI (Apr), French Flash CPI (Apr), German Flash GDP (Q1), EZ Flash CPI (Apr)/Flash GDP (Q1), US Employment Wages (Q1), US Chicago PMI (Apr), New Zealand Jobs (Q1). Stryker, Amazon, AMD, Starbucks, Mondelez, Eli Lilly, Coca-Cola, McDonald’s HSBC, Eaton, Cameco, Mercedes-Benz Group, Volkswagen, Adidas, Banco Santander, PayPal, Super Micro Computer, 3M

Technical analysis highlights: S&P500 uptrend if close above 5,146, key support 4,953. Nasdaq 100 key resist at 17,808, support at 16,963. DAX  if closing above 18,192 uptrend, support 17,620. 
EURUSD correction could push higher to 1.0777, below 1.0670 downtrend. GBPUSD correction likely to be over and resume downtrend. USDJPY likely to be caught in wide range between Monday high and low. AUDJPY correction likely down to 100.50. USDCAD resuming uptrend with potential to 1.39, key strong support at 1.3618. AUDUSD rejected 0.6584 likely resuming downtrend, support at 0.6485. Copper upside potential to 490-500. Gold correction could unfold, if above 2,350 likely resuming uptrend. US 10-year T-yield correction likely, support at 4.47

Volatility: Volatility, measured by the VIX, continues its downward path and ended yesterday at $14.67 (-0.36 | -2.40%). Today is another busy day on the earnings front, with big names publishing their Q1 results. Volatility due to these earnings, is expected from companies like Amazon.com, Eli Lily, Coca-Cola, AMD, McDonald's, Starbucks, PayPal, Super Micro Computer, and others. The economic calendar itself is quiet today, contrary to tomorrow which will bring a slew of indicators that will move the markets. VIX futures moved only slightly overnight and are now at 15.150 (-0.020 | -0.12%). S&P 500 and Nasdaq 100 futures are at 5138.25 (-8.75 | -0.17%) and 17885.80 (-18.75 | -0.10%) respectively. Monday's top 10 traded stock options, in order: TSLA, NVDA, AAPL, SOFI, AMZN, INTC, META, AMD, GOOGL and PYPL.

In the news: China's slow April factory, services activity dents economic momentum (Reuters). Tesla's self-driving bid for China faces rivals racing ahead (Reuters). Microsoft to invest $1.7 bln in cloud, AI in Indonesia, CEO says (Reuters). HSBC chief executive Noel Quinn to step down after five years (FT). French economy grows faster than expected in first quarter (FT). Ericsson chief says overregulation ‘driving Europe to irrelevance’ (FT).

Macro events (all times are GMT): Germany Q1 GDP SA QoQ est. 0.1% vs -0.3% prior (08:00), Eurozone April preliminary core CPI MoM est. 0.6% vs 0.8% prior (09:00), Eurozone Q1 advance GDP SA QoQ est. 0.1% vs 0% prior (09:00), MNI Chicago April PMI est. 45.0 vs 41.4 prior (13:45), US Conference Board Consumer Confidence April est. 104.0 vs 104.7 prior (14:00)

Earnings events: Key focus is Amazon and AMD both reporting tonight after the close – read our earnings preview here. Eli Lilly, Coca-Cola, and McDonald’s will all report ahead of trading and thus impact today’s session.

• Today: Stryker, Amazon, AMD, Starbucks, Mondelez, Eli Lilly, Coca-Cola, McDonald’s HSBC, Eaton, Cameco, Mercedes-Benz Group, Volkswagen, Adidas, Banco Santander, PayPal, Super Micro Computer
• Wednesday: Qualcomm, Mastercard, Pfizer, ADP, Barrick Gold, Franco-Nevada, GSK, Estee Lauder, DoorDash, AIG, Kraft Heinz
• Thursday: Novo Nordisk, Linde, Booking, Apple, Amgen, Shell, ConocoPhillips, Cigna, Regeneron Pharmaceuticals, National Australia Bank, Macquarie Group, Vestas, Mærsk, Ørsted, Genmab, Pandora, Universal Music, ING, ArcelorMittal, Coinbase, Fortinet, Block, Moderna, Cloudflare,
• Friday: Novonesis, Danske Bank, Credit Agricole, Societe Generale, Intesa Sanpaolo, MercadoLibre, Monster Beverage
• Weekend: Berkshire Hathaway

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