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From the Floor: US, EU and Chinese data pointing higher — #SaxoStrats

   • Merkel said to prefer new elections
   • US, EU, Chinese data pointing higher
   • Higher highs possible in key US indices
   • 'Opec doesn't want to rattle the cage': Hansen
   • Nasdaq 100 breaks out of rising wedge pattern

By Michael McKenna

The latest US leading indicators release for October showed the reading at 5.2% year-on-year, the highest level since May 2015. According to Saxo Bank head of equity strategy Peter Garnry, the print is just the latest sign that the global economy is expanding with data from the US, the Eurozone, and now China starting to point higher.

Looking at the major US indices, Saxo technical analyst Kim Cramer Larsson says that both the Nasdaq 100 and the S&P 500 have broken out of rising wedge patterns of late, with little divergence seen. "The Nasdaq 100 move has been stronger,"notes Larsson, "but higher highs remain possible in both".

In single shares, Tencent continued its post-earnings rally overnight, helping to lift Hong Kong's Hang Seng index by 1.5% as it surged past a market capitlisation of $500 billion, exceeding that of Facebook.

Source: Saxo Bank

In forex, Saxo Bank FX chief John J Hardy reports that the GBP broke sharply higher on news that London is prepared to raise its Brexit "divorce bill" offer to £40 billion. The news, of course, comes in the wake of Monday's German coalition talks breakdown, a development that continues to weigh on the euro.

"The latest reports indicate that Chancellor Merkel prefers a new round of elections,"says Hardy.

Beyond EUR and GBP, we continue to see weakness in the G10 smalls, reports Saxo's FX chief, and the Turkish lira has spiked severely lower on President Erdogan's apparent attempts to apply political pressure to Turkish central bankers.

"Turkey's 10-year bond yield has blown out to 13%," reports Hardy.

Finally, Saxo Bank head of commodities strategy Ole Hansen says that headlines will drive oil prices between now and the November 30 Opec meeting with Brent now having settled in to a $61-$63/barrel range.

"Opec ultimately doesn’t want to rattle the cage at its next meeting," says Hansen, "as the supply cuts have been very successful".

For more on forex, equities, commodities, and technical analysis, watch today's Morning Call in full.

Hong Kong

Hong Kong shares continue to rally, driven in part by Tencent's outperformance. 
Photo: Shutterstock

Michael McKenna is senior editor at Saxo Bank


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