Saxo Spotlight: What’s on investors & traders radars this week? Will NZ CPI shock, & Microsoft & Tesla disappoint
Macro

Saxo Spotlight: What’s on investors & traders radars this week? Will NZ CPI shock, & Microsoft & Tesla disappoint

Jessica Amir
Market Strategist

Summary:  Risk on tone supported by lower bond yields and US dollar. Saxo’s equity baskets show the best gains are in sectors benefiting from China’s reopening. If NZ's CPI slows more than expected, the NZDUSD may see profit taking. Chinese New Year brings limited market hours. Australia’s ASX200 to take out a new all-time high, but CPI is in the way. Gold and copper continue to rally up. Oil prices are higher ahead of the EU embargo on Russia. Tech profits expected to dive, but there is room for disappointment.

Saxo Spotlight: What’s on investors & traders radars this week, January 23-27: US GDP, AU NZ CPI, Microsoft & Tesla earnings 

Risk on tone supported for now as bond yields hold near lows, along with US dollar index

US Treasury bond yields trading at some of the lowest levels down about 0.8% from the October peak, but yields are up slightly at 3.48%. Yields look set for lower levels and could even head back down and could drop below the 200-day SMA. The next level we’re watching is if yields fall to 3.22%.  If that level is reached, it would theoretically support US equities. We’d also need to see the US dollar remain lower. The US dollar index is now down 10% from its September high, but rose slightly on Friday after hotter than expected US prouder inflation for November, which bolsters the case for the Fed to keep hiking, even if it’s at a slower pace.

Most gains in Saxo's equity baskets are in sectors benefiting from China’s reopening

The Travel, E-commerce basket of stocks are up the most this month, followed by Energy Storage and China Consumer and Technology basket. However year-on Year, the most growth is from Defence which is up 21%.


Economic news brings FX into focus

US fourth-quarter GDP data, European PMIs and the Bank of Canada rate decision, as well as CPI for Australia and NZ will all be watched. NZ Consumer prices are expected broadly to have climbed 7.1% in the fourth quarter from a year earlier, which could mark CPI is slowing from the prior 7.2% and, more importantly, less than the 7.5% predicted by the Reserve Bank in its most recent forecasts. Given the NZ dollar was one of the strongest currencies last week, it could face profit taking if the data is weaker than expected.


Market hours are limited this week, for Chinese New Year

This also means light volume is expected and thus moves could perhaps be amplified on thin trade. China’s market is shut all week (Monday to Friday), Hong Kong’s market is shut for Monday to Wednesday, Singapore’s market is shut for Monday and Tuesday. Australia’s market shut Thursday for Australia Day.


Australia’s ASX200 could likely to take out a new all-time high.....

this is supported by the rally in commodities and expected higher earnings from mining companies, which make up 25% of the market. However CPI is a focus this week. Our technical analyst backs up this thinking, that the ASX200 is likely to hit a new all high- for more click here. But the danger this week is if Q4 CPI is hotter than expected on Wednesday, then equities could see profit taking. However overall sentiment is bullish for the ASX as demand for copper and iron ore is likely to pick up after CNY. CPI is expected to rise to 5.8% YoY from 5.6% (trimmed Mean CPI). And CPI YoY is expected to rise to 7.7% YoY, from 7.3%. Hotter data could further fuel the AUD and a likely fuel a sell-off in tech stocks and real estate. In company news to watch, iron ore company Champion Iron (CIA) reports quarterly earnings. Given the iron ore price is up 66% from its low, its outlook is expected to be optimistic.


In commodities Gold and copper are gaining momentum and oil rallies

  • The precious metal, gold, has been supported by lower yields and the US dollar falling, which has supported gold up 19% from its September low. As Ole Hansen points out we might need to see ETF holdings pick up in Gold, to see longer term investors getting involved, which could support gold higher, or potentially we may see some profit taking. However, gold momentum remains as long as the USD and yields behave. Recall that if the Fed pauses rates and rates peak, we think there is a case for our outrageous prediction of gold hitting $3,000 coming true.
  • Copper trades up 0.5% to $4.25, its highest level since June last year, continuing its 32% rally off its low on expectations that China will increase buying after the Luna New Year holiday. Plus there are also disruptions on copper output in Peru, which could impact 2% of global copper output. So given inventory levels are already lower and demand expectations are picking up, copper prices are underpinned.
  • Gas and oil prices are also higher too ahead of the EU embargo on Russian products which starts on February 5th. Oil (WTI) is up 1.3% to $82.64, at this level since early November, after two weeks of gains. Refinery demand is supporting prices.

Tech companies' profits are expected to dive, but earnings estimates could be too optimistic & disappoint

  • In the S&P500(US500.I) tech companies, which make up 26% of the market, are expected to report a quarterly profit drop of 9.2% on average, according to Bloomberg. This could be the biggest tech profit drop since 2016. Forward 12-month earnings of 39% is also expected according to Bloomberg. The danger is that estimates are still too bullish, and markets will likely be disappointed, which would trigger a fall.
  • Overall aggregate S&P500 earnings are expected to have grown 2.12% in the quarter and miners are expected to deliver the most growth, real estate with the least.
  • So far, only 55 companies have reported in the S&P500 and earnings have fallen over 4% on average. So, the bear case is still a factor for some investors, especially in tech. More job cuts are expected with margins being squeezed. EV companies are also facing pressure with higher metal prices.
  • On Tuesday Microsoft kicks off earning season. Defence giants Raytheon and Lockheed Martin report on Tuesday. Tesla reports Wednesday. On Thursday Intel and Mastercard report, and steel giant Nucor. On Friday Chevron. These could be industry proxies to watch with a major focus on their outlooks.


Key economic releases & central bank meetings this week to watch 


Monday 23 January

  • China, Hong Kong, Taiwan, South Korea, Indonesia, Malaysia, Singapore Market Holiday
  • Japan BOJ Meeting Minutes (Dec)

Tuesday 24 January

  • China, Hong Kong, Taiwan South Korea, Malaysia, Singapore Market Holiday
  • Australia Judo Bank Flash PMI, Manufacturing & Services
  • Japan au Jibun Bank Flash Manufacturing PMI
  • UK S&P Global/CIPS Flash PMI, Manufacturing & Services
  • Germany S&P Global Flash PMI, Manufacturing & Services
  • France S&P Global Flash PMI, Manufacturing & Services
  • Eurozone S&P Global Flash PMI, Manufacturing & Services
  • US S&P Global Flash PMI, Manufacturing & Services
  • Thailand Customs-Based Trade Data (Dec)
  • Germany GfK Consumer Sentiment (Feb)
  • United Kingdom CBI Trends (Jan)

Wednesday 25 January

  • China, Hong Kong, Taiwan Market Holiday
  • New Zealand CPI (Q4)
  • Australia Composite Leading Index (Dec
  • Australia CPI (Q4)
  • Japan Leading Indicator (Nov, revised)
  • Singapore Consumer Price Index (Dec)
  • United Kingdom PPI (Dec)
  • Thailand 1-Day Repo Rate (25 Jan)
  • Germany Ifo Business Climate New (Jan)
  • Canada BoC Rate Decision (25 Jan)

Thursday 26 January

  • Australia, China, Taiwan, India Market Holiday
  • Japan BOJ Summary of Opinions (Jan)
  • South Korea GDP (Q4)
  • Japan Services PPI (Dec)
  • Philippines GDP (Q4)
  • Singapore Manufacturing Output (Dec)
  • Norway Labour Force Survey (Dec)
  • United Kingdom CBI Distributive Trades (Jan)
  • Canada Business Barometer (Jan)
  • United States Durable Goods (Dec)
  • United States GDP (Q4, advance)
  • United States Initial Jobless Claims
  • United States New Home Sales (Dec)

Friday 27 January

  • China, Taiwan Market Holiday
  • Japan CPI, Overall Tokyo (Jan)
  • Australia PPI (Q4)
  • Australia Export and Import Prices (Q4)
  • United States Personal Income and Consumption (Dec)
  • United States Core PCE (Dec)
  • United States UoM Sentiment (Jan, final)
  • United States Pending Home Sales (Dec)

 


Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.