Key points:

  • Equities: Nvidia earnings tonight is the most important event during the Q2 earnings season
  • Currencies: AUD erases year to data loss on rate divergence
  • Commodities: Crude drop cushioned by Libya disruption and US stock drop
  • Fixed Income: US 2-year auction yield lowest in two years, 5-year today
  • Economic data: EIA weekly report and US 5-year Treasury auction

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

In the news: Asia stocks fall with Nvidia earnings on tap; Australia dips on sticky CPI (Investing), China bond bulls warned over bumper debt supply (FT), Donald Trump faces revised US indictment in election subversion case (Reuters), Warren Buffett Sells More BofA Shares, Reaping $982 Million (Bloomberg), UK PM Starmer warns of ‘painful’ October budget to tackle shortfall in public finances (CNBC)  US two-year auction yield lowest in two years

Macro:

  • US consumer confidence rose to 103.3 in August from 101.9 (revised higher from 100.3), coming in above the 100.8 expected. The upside was due to a tick up in both the Present Situation Index, to 134.4 from 133.1, and the Expectations Index, to 82.5 from 81.1. Respondents were more concerned about the labour market, but the changes were marginal suggesting only a gradual deceleration in employment picture.
  • ECB’s Klass Knot, a known hawk, spoke at a panel and said that he is awaiting more information before deciding on whether to support an interest rate cut at the September 12 meeting. Key reports therefore will be the Eurozone inflation print due this Friday, and a softer print could mean that the ECB could continue to cut rates gradually.
  • Australia’s CPI rose 3.5% YoY last month, down from 3.8% and just above estimates. The trimmed mean core measure, which smooths out volatile items, advanced 3.8% versus 4.1% a month earlier. The result was driven by slowing price growth in clothing and footwear, electricity and fuel.

Macro events (times in GMT): EIA’s Weekly Crude and Fuel Stock Report (1430), US to sell USD 70 bln 5-year Treasury Notes (1700)

Earnings events: Today’s big event is Nvidia earnings scheduled for after the US market close. Read our Nvidia earnings preview from last Friday for more insights on expectations and how views on Nvidia. Other important earnings today come from Salesforce and CrowdStrike with the latter in focus due its cyber security fallout back in July that is expected to have impacted growth through significantly less new business. Novonesis reports significant Q2 revenue beat with organic revenue growth at 10% vs est. 8%. Anta Sports, the so-called Nike of China, delivers better-than-expected 1H earnings including a significant jump in intended buybacks worth HKD 10bn. Despite a good start to the year the sports retailer lowered its outlook for the rest of the year underscoring the weakness in the Chinese economy. Shares are up 4%.

  • Wednesday: BYD, Royal Bank of Canada, Nvidia, Salesforce, CrowdStrike, Fortescue, Novonesis, HP, Li Auto, Pure Storage
  • Thursday: Dell Technologies, Marvell Technology, Pernod Ricard, Lululemon, Autodesk
  • Friday:

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

Equities: Hong Kong shares are trading 1% lower today as Chinese companies are cautious on the outlook in their earnings releases with sports retailer Anta Sports as the recent case and PDD (parent company of Temu) on Monday. Futures are pointing to a flat open in Europe and the US. The key market event for equities today is earnings from Nvidia scheduled for release after the US market close. With the AI theme being one of the strongest trends over the past year the impact from Nvidia earnings will be important sentiment.

Fixed income: On Tuesday, European sovereign yield curves bear-steepened, with German 10-year yields slightly retreating after reaching a month-to-date high, closing at 2.28%, the highest since July 31st. Spanish and Italian bonds underperformed, driven by comments from ECB members Lane and Knot, who emphasized the need for more data to confirm inflation's path toward 2%. UK Gilt yields also surged, influenced by European sovereign weakness and concerns over the UK budget, where higher-than-expected debt issuance seems inevitable as Starmer warns of potential tax hikes. U.S. Treasuries ended mixed with a steeper yield curve. Short-term yields fell due to strong demand in the two-year note auction, while long-term yields rose slightly, influenced by supply-driven increases in European bond yields. The two-year yield dropped over 3 basis points to 3.9% after the auction, while the 10-year yield rose by about 2 basis points to 3.82%. The market showed little reaction to economic data, including an unexpectedly high August Conference Board consumer confidence report, which rose to a six month high. Today's focus should be on Eurozone M3 data and speeches by Fed's Bostic and BoE's Mann, and in the U.S. on a 5-year US Treasury auction, which might spark volatility if poorly received (for a preview click here). Later in the week, watch for the US Core PCE deflator and Eurozone HICP estimate, along with ECB members’ speeches.

Commodities: Crude prices fell back on Tuesday in a move that can best be described as technical motivated after Brent failed to breach the 200-day moving average, even as production and export halts begin to take effect in Libya. Prices steadied after the API reported an across the board drop in US crude and fuel stockpiles. Overall, the tug-of-war between demand pessimism and supply disruptions will likely keep prices range bound for now. Gold holds above USD 2500 but the failure to reach a fresh record, signalling potential buying fatigue ahead of Friday’s US inflation data and a September cut fully priced in. Chicago corn, soybean and wheat futures rose on Tuesday, as a spell of hot weather in the U.S. Midwest could damage crops, while weekly crop ratings from the U.S. Department of Agriculture, all fell from last week. Aluminum fell from its highest level since mid-June after inventories ticked higher again in China, while copper and zinc also retreated.

FX: The US traded firmer overnight after drifting lower on Tuesday after a strong 2-year Treasury auction indicated that markets continue to bet on an aggressive rate cutting cycle from the Fed. The weakness in the US dollar could be crucial to understand for investors with a global portfolio, and we discussed some risk management strategies in this article. The Australian dollar erased its year-to-date loss after inflation eased but stayed at levels left the market betting on less than one 25 bps cut this year.  Sterling extended to over two-year highs against the US dollar as short-term yields jumped after PM Starmer warned about a painful October budget ahead. The Canadian dollar also extended gains for a third straight day despite oil prices slipping lower, signaling a potential squeezing of short positions in the Loonie.

For a global look at markets – go to Inspiration.