Global Market Quick Take: Europe – 19 December 2023

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

Equities: Wall Street extended its relentless advance Monday, buoyed by a burst of deals as traders largely ignored tempered messaging from Fed officials. The Nasdaq 100 extended gains to close at a record for the second consecutive session driven by mega-cap technology stocks. Meta, Amazon, Alphabet, and Nvidia each gained over 2%. However, Apple slid 0.9% after announcing a suspension of its Apple Watch Series 9 and Ultra 2 in the U.S. due to patent issues. U.S. Steel soared 26.1% after agreeing to the takeover by Nippon Steel.

FX: USDJPY rose after the Bank of Japan kept its monetary policy unchanged while offering no guidance on when or whether it might end the world’s last negative interest rate regime.

Commodities: Crude oil extended its bounce on Monday, reaching a two-week high after more companies, including BP said it would avoid the Red Sea following a spike in attacks. While it may lift freight rates and prolong journeys the actual impact on supply remains limited. Speculators had prior to these developments' cut their futures net long to a 12-year low, so short covering and reestablishing longs probably key drivers behind the move back towards $80 in Brent. Gold continues to consolidate within a wide $2010-50 range despite attempts by Fed members to lower rate cut expectations. 

Fixed income: Treasuries consolidated with yields bouncing off lows after the dramatic post-FOMC movements last week. The 10-year yield rose by 2bps to 3.93%, while the 2-year yield remained flat.

Macro: BOJ maintains policy rate at -0.1% and 10-year JGB yield target at about 0%.  It would patiently continue with monetary easing and keep upper bound reference on long term yields at 1%.  The yen fell on the news, 10-year JGB’s rose while the Nikkei jumped 1.4%

Technical analysis highlights: S&P 500 uptrend extended, likely to test all-time high at 4,818. Nasdaq 100 testing all-time highs, likely to be taken out. DAX top and reversal pattern correction likely, support at 16,528 and 16,060. EURUSD likely to testing key resistance at 1.10 once again. USDJPY rebounding likely to 145.40, support at 141.55. GBPUSD above key resistance at 1.2745. potential to 1.29. Gold potential to 2,070.  WTI Crude oil rebound likely resist at 72.65, Brent above resist at 77.25. 10-year T-yields below support at 3.95 next 3.83   

In the news: Oil and gas prices surge as BP stops Red Sea shipments following Houthi attacks (CNN), Apple to Halt US Sales of Smartwatches After Patent Loss (Bloomberg), Volcano erupts on Iceland’s Reykjanes peninsula weeks after town evacuated (CNN)

Macro events (all times are GMT): Eurozone CPI (Nov) exp –0.5% & 2.4% (0900), Canada CPI (Nov) exp –0.1% & 2.9% vs 0.1% & 3.1% prior (1230), US Building Permits (Nov) exp –2.2% vs 1.1% (1230), APIs weekly crude and fuel stock report (2030)

Earnings events: Accenture & FedEx

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