Global Market Quick Take: Europe – 26 March 2024

Key points:

• Equities: Asian markets are up with tech stocks leading the gains. Boeing CEO resigned. Consumer confidence data will be released today and could impact equities trading.
• FX: Dollar weakened yesterday with the exception of Yen. USDCNH reversed gains after China intervened in the market.
• Commodities: Oil prices remained steady after attacks on Russian oil refineries. Gold found support and halted the decline. Cocoa prices surged due to supply tightness.
• Fixed Income: Treasury yields rose after the auction met with subdued demand.
• Economic data: US March Consumer Confidence is a key release to watch

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

Equities: Hang Seng futures are up 1.4% in today’s session lifted by technology stocks (Tencent and Xiaomi) and sports retailer ANTA Sports reporting strong 2023 results rising 3%. US and European equity futures are pointing higher today with S&P 500 futures up 0.3%. Boeing’s CEO stepped down yesterday as the crisis as the world’s largest airplane manufacturer deepens opening a new turnaround chapter in the company’s history. Key macro release to impact equities in today’s trading is US March Conference Board Consumer Confidence (14:00 GMT) as improvement in consumer confidence could lower expectations for rate cuts this year even further.

FX: The dollar gave back some of last week’s strong gains yesterday, with the yen a notable exception, trading near top of range above 151, with traders looking to challenge Japan’s top currency officials, warning about “clearly seeing speculative movements in FX markets”.  Meanwhile, USDCNH reversed nearly all its gain from last Friday, plunging to finish Monday at around 7.2530 after the People’s Bank of China fixed the USDCNY rate at 7.0996 and sold USDCNY heavily in the onshore market.

Commodities: WTI crude oil and Brent crude oil front month futures trade steady after both climbing 1.6% on Monday as Ukrainian drones hit another Russian oil refinery, adding to the list of casualties of Russian refining infrastructure, which according to Goldmans has knocked out an estimated 900,000 barrels per day of refining capacity, supporting the prices of gasoline and not least diesel. Gold has found a fresh bid ahead of key support below $2150, thereby reducing the risk of long liquidation from hedge funds, key drivers behind the rally this past month. Cocoa’s parabolic rise extended to $9,650 per tons on Monday with extreme supply tightness driven the cost of cocoa beans above copper.

Fixed income: Government bonds on both sides of the Atlantic slid yesterday as markets prepared to welcome ample corporate and sovereign bond supply in primary markets. At the same time, markets trimmed ECB and the Federal Reserve rate cut expectations for 2024. Traders bet on a 90bp rate cut in Europe versus 94bp last week and 77bp in the US versus 80bp on Friday. The 2-year US Treasury auction was strong, with primary dealers taking 13.4% of the issuance, the lowest since June last year and one of the lowest on record. However, the auction tailed by 0.5bp as investors demanded a higher return after yields dropped roughly 14bp last week. To weigh on bond markets were also Bostic's comments, saying that he sees only one rate cut this year. At the same time, Fed Cook calls for a cautious approach to rate cuts, and Goolsbee sticks with three rate cuts but needs to see more progress on inflation. Today, the focus shifts to the 5-year auction, which we expect to receive solid demand due to its appealing risk-reward proposition.

Macro: The US released a mixed bag of data, with new home sales sliding to 662k, below 677k expected in February while the January data was modestly revised up to 664k from previously reported 661k. The Chicago Fed National Activity Index came in at 0.05, stronger than the -0.34 expected and last month’s -0.54 (revised down from -0.3) but the Dallas Fed Manufacturing Activity Index weakened to -14.4 from -11.3, below the -10.0 expected.

Technical analysis highlights: Main event: EURUSD bounced from strong support at 1.08, like move to 1.09. GBPUSD strong support at 1.26, likely bounce to 1.27. Dow Jones and reversal pattern, S&P 500 Top and reversal pattern cancelled. Eyeing 5,300. But uptrend stretched. Nasdaq 100. Top and reversal still intact. Needs to close above 18,417 to cancel. EuroStoxx50 uptrend key support at 4,976. EURUSD bounce from strong support, like move to 1.09. USDJPY struggling to break key resistance at 151.95. EURJPY uptrend intact, support at 163.69. USDCHF still room to 0.9050 resistance. USDCAD range bound 1.3440-1.3620. Gold uptrend intact, key support at 2,146. US 10-year Treasury yield likely range bound 4.20-4.35 strong resist. Volatility: Yesterday, the VIX saw a minor increase to $13.19 (+0.13 | +1.00%), while volatility measures like the VVIX and SKEW remained relatively stable, indicating a calm market environment. VIX futures dipped to 14.30 (-0.10 | -0.70%), while futures for the S&P 500 and Nasdaq 100 showed modest gains, up to 5289.80 (+11.25 | +0.21%) and 18569.25 (+55.75 | +0.30%). Monday's trading activity was most vibrant in options for TSLA, NVDA, AAPL, AMD, MU, AMZN, MARA, INTC, COIN, and PLTR.

In the news: Biggest Challenge Facing New Boeing CEO Is Winning Over Airlines (Bloomberg), Japan's corporate service inflation steady in February (Reuters), New chairman is named for US House select committee on China (SCMP), CATL to Keep Expanding in the Face of Slower EV Growth, Chairman Says (Bloomberg), Europe's clean power sources on a record roll in early 2024: Maguire (Reuters), Cocoa Is More Expensive Than Copper as It Tops $9,000 (Yahoo)

Macro events (all times are GMT): US Durable Goods Orders (Feb) exp 1% vs –6.2% prior (1130), US Consumer Confidence (Mar) exp 107 vs 106.7 prior (1300), Richmond Fed Mfg Index (Mar) exp –5 vs –5 prior (1300), API’s Weekly Crude and Fuel stock Report (1930)

Earnings events: Today’s key earnings event is ANTA Sports, China’s equivalent of Nike, which could provide insights into consumer demand in China.

• Today: BYD, China Telecom, Nongfu Spring, CITIC Securities, ANTA Sports, Flutter Entertainment, McCormick
• Wednesday: ICBC, China Life Insurance, Midea Group, Haier Smart Home, Cintas, Paychex, Carnival, H&M
• Thursday: Agricultural Bank of China, Bank of China, CITIC, Walgreens Boots Alliance

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