In this London‑based morning market briefing, the presenter provides a comprehensive overview of the previous US market close, Asian session, and the outlook for the day. The Nasdaq 100 posted its largest one‑day rally since November, driven by a 20% jump in Tesla shares and broader tech gains, which the host attributes partly to short‑covering and a technical breakout above recent resistance. The S&P 500 and Dow showed modest gains, but the host doubts the sustainability of the Nasdaq surge. The briefing then shifts to the US Treasury market, highlighting the 3‑year auction that yielded a lower-than‑expected price (0.355%), a strong bid‑to‑cover ratio (2.689), and a subsequent drop in yields that lifted risk sentiment. The upcoming 10‑year auction is flagged as a key event. Chinese inflation data are examined: February PPI rose 1.7% YoY (fastest in over two years) while CPI fell 0.2% YoY, indicating flat consumer price pressure despite producer‑price acceleration. The host connects this to global inflationary tailwinds such as oil prices, chip shortages, and shipping costs. FX moves are summarized: the dollar firmed modestly, while the euro and sterling each slipped about 25 pips amid broader euro‑sterling tensions related to post‑Brexit trade issues. Oil market commentary notes a recent 7% pullback from a $68 peak, noisy API inventory data (a 12.8 million‑barrel build), and a bullish longer‑term view, citing a 22% gain since February and an 87% rise from the November low. Finally, the host outlines the day’s calendar: US CPI release at 1:30 am ET (expected 1.7% YoY), Bank of Canada rate decision at 3 am ET, DOE oil inventory report at 3:30 am ET, the 10‑year Treasury auction at 6 pm London time, and the anticipated passage of a COVID‑19 stimulus bill in the US House. The briefing ends with a call for comments, a thank‑you for reaching 20,000 YouTube subscribers, and an invitation to the Discord community.
Chapters
Very good morning to you. It's Wednesday the 10th of March and it's just coming up to 7 AM here in London. So just wanted to give you the regular briefing of what happened on the close of Wall Street overnight in Asia and then our kind of outlook for the day ahead. I'm going to kick things off with the heat map of the S&P 500 and what a difference a day makes. It's almost the mirror opposite of what we had from yesterday, which was all of the big mega-cap tech were lower, now all higher, reversing that move. And in fact, the NASDAQ 100 as an index posted its biggest rally since November. As you can see here, likes of Apple up 4%, Amazon and Facebook similar margins. But check out Tesla shares up 20% after they were getting hammered in some of that rotational play that we had been seeing. Now, risk sentiment generally as well supported by the latest 3-year auction that came out of the US. We're going to talk about that in a bit more detail in a moment, but this was the first of 3 auctions for the week, and people were a little bit apprehensive given the weakness seen in the 7-year US auction 2 weeks ago. And actually, it came out okay, and that actually provided a bit of relief. Yields actually dropped further after that auction which further helps just general risk sentiment overall. And just looking at the NASDAQ here, um, on the chart for the time being, and a bit of a range break as well of that previous double top of the week's price action, which came after we kind of surged out of the gate at the open on the NYSE yesterday. And that also just helping some of the price activity from a technical perspective. And obviously we just powered on up all the way into the close, pretty much, before a little dip that was seen in the final half an hour of trade into the closing bell. Faded a little bit in the overnight session, and the Asia-Pac region generally just kind of toeing the line, if you like, and mildly positive following the positive handover we had in the US. But nothing to really read into in terms of the handover going into the European open, where obviously we were, we were in the market yesterday to observe much of that rally. So a couple of things here then. So a bit of a reversal, of course, after the heavy selling pressure NASDAQ have been seeing. We've had a bit of a pop through here technically through the week's top end of the range, as you can see that's formed here on the daily. Um, it doesn't look, um, you know, 4% is definitely a big move and the biggest move in many months for the NASDAQ in a singular session. But when you look at the chart on this perspective, doesn't actually look that, that big. Um, definitely though, the, the downside level that we'd marked up before, this kind of highlighted one at 12,234, is the level that's held up so far. That previous era of resistance and support going back through October, November, December of last year, and then the retest we've just had in the last couple of days will be a key one to watch just generally going forward over the, the medium term. Um, just having a look then, the other things I was reading last night when it comes to the NASDAQ was the FT were reporting that some analysts said that some of the big move that we had yesterday was propelled by short covering as well. Obviously there's been a lot of press coverage about how the, the kind of switch through in the rotational play and the tech stocks would be the biggest casualties given the movement in the high yield environment And so perhaps, yeah, a bit of short covering as the market kind of has snapped up against people in those short positions could well be part of that. And perhaps that technical level as well, just helping further squeeze people out of some of those positions that were looking at more optimal shorts at around that range high in the short term. Citigroup analysts in a note last night said that they saw such a shift, or warned such a shift could prove fleeting like what we saw yesterday, which could cap the size of the move. Obviously, if it is just short covering, it doesn't really change perhaps then generally people's fundamental perception that there's perhaps better sector positioning in other areas, and that have seen just generally greater outperformance against the tech and NASDAQ-heavy, uh, or the, the tech-heavy NASDAQ of late. Uh, the S&P yesterday finished up around 1.4. It was almost the reverse that we've seen recently. The Dow was up just 0.1% compared to the 4% gains that we've seen in the NASDAQ. How sustainable is that? Um, I don't actually think it is sustainable, and I don't think that we've seen personally yet the bottom for the NASDAQ. But overall, I must stress that this is still for me an idea of a little bit of movement across the exposure that people want to certain stock sectors, I still think ultimately when the economy reopening globally, that generally it's a, it's a positive narrative for stocks in general. It's just that some are going to outperform others, and it's about strategic placement then to benefit from that move. So that's the overnight kind of session in China overnight. One thing to mention was we did have some data. So on the inflation side, PPI rose at the fastest pace in more than 2 years in February, 1.7%, was above expectations at 1.5%. Consumer prices fell 0.2% last month from a year earlier, slightly better than the projected 0.3% decline people were anticipating. Here's a, here's a chart of these metrics just to give you a bit of context of the general pattern that we've had. And probably the biggest thing that you're seeing here is consumer prices are still remaining fairly flatline. Having, having kind of crashed through the period of the pandemic, of course, just given the sharp fall in inflationary conditions, given the onset of the pandemic and lockdowns and so forth. But what's interesting now is that the Chinese economy has been reopening to a certain respect for some time. Economic data, which we're seeing, you know, sharp improvements in the likes of the US recently, that's been happening in China for some time. And that then is leading to the PPI prices just moving further and further away, that kind of divergence that we're used to seeing through this period of recent years starting to materialize again. And so you've got activity picking up, but consumer still remaining a little lackluster at this point in time in terms of their confidence. It would translate to— Chinese producer prices have been a major contributor to global inflation. In recent decades. Because if you think about supply chains, and they've become more integrated, generally speaking, and expensive oil, given the surge in prices that we've had, a shortage of chip, um, computer chips globally, soaring shipping costs— these could all be significant tailwinds for global inflationary pressures that may then reverberate down the line and make the cost of goods more expensive. Just generally. And it's all coming in that time where inflation expectations are rising generally with the opening, reopening of different economies around the world. So yeah, quite interesting to, to have a look at this. It definitely kind of feeds into the more kind of aggressive people talking about inflation emerging, emerging in the future. This would, would play to that particular view. Overnight then, the other things that we have had is the, the dollar has firmed up a little bit during the Asia-Pacific session. So the Dixie's trading up about a quarter of 1%. So consequently, the major pairs are trading a little bit softer this morning. I wouldn't say anything too dramatic, um, more greenback-based than I'd say individually euro sterling narratives that are driving these currency markets at the moment. So euro and Cable down about 25 pips each respectively. One thing, Cable has failed obviously yesterday to reclaim the 139 handle. A few people looking at the cross-channel tensions which are brewing at the moment with the EU nations saying that they're getting behind Brussels to plan to launch legal action against the UK for easing the impact of Brexit on Northern Irish businesses. So that's still ongoing at the moment, and there's been quite a lot of the vaccine supply manufacturing news still kind of going back and forth between Britain and Europe at the moment. That's worth just keeping half an eye on. Otherwise, the other market I just quickly wanted to comment on was oil. WTI crude has, has moved substantially lower actually over the course of the last two days. I mean, from, from the peak that we saw at the reopening of Globex trade on Sunday night, which was up akin to $68, we're actually off nearly 7% from those highs. And actually, technically speaking, we are trading beneath what, what is quite an interesting near-term level. You can see here was the previous highs of resistance back on the 25th, 26th of February. It helped support price after the OPEC+ decision last week on the initial surge in price on the pullback to then take us all the way up to where we were. We're now below that point, and that level was holding quite nicely into the US close last night, but it's been broken down in the Asia-Pac session, so prices have drifted down. We have had the API oil inventories last night. I must stress that these are incredibly noisy at the moment, so personally I don't really put too much weight in them specifically, given the fact that, as we saw last week, this is all reflective of the general disruptions that we saw in Texas and generally nationwide with the great freeze in the US just a few weeks ago. But nonetheless, the headline crude number was a build of 12.792 million. I don't— I'm not sure really where these analysts get these forecasts. I mean, it's so offbeat that I don't think you should really look at that too much. Just the fact that this is obviously incredibly sizable figure in a historical data context. Cushioning about a $300,000 gasoline draw of $8.5 million. So yeah, mixed and, and particularly noisy given those, those weather impacts that we, we saw emerge in last week's data. But overall, I think with this oil price coming onto a daily chart, I think it's, it's always really good to just look at the market in perspective. And, you know, the oil market has just been on an absolute tear since November, pretty much, when we were trading at one point down at the low $30 mark. And we've got all the way up to, you know, the best point of $68 or thereabouts on the high. So if I look at two kind of things here, even if we were just looking at the recent price surge that we've had over since the 3rd of March, to the peak, that was 14%. So we're still up a good 7% even with the pullback that we've had. Even if you're looking from February where this initial or latest phase of, of bid has come in, then we're still up about 22%. And if you go from November low in oil, we're still up about 87-88%. So for me, I know on the intraday market this feels quite heavy in the price. But ultimately, I really don't see a great deal here that makes me nervous for what still is more a generally bullish view that I maintain for oil. I'm sure— is there price— is there scope for this price to pull back? There certainly might be. The thing I'd be looking at as a trigger for that would be the dollar in the short term if you're trading intraday. But I still think that we'll remain, uh, our heads above this kind of 60 marker for, for the time being, for, for the rest of this week, I would anticipate. Okay, one of the other things I just wanted to mention was then the auction that we had last night. And actually, just looking here, it's going to keep the US 10-year up for a moment. And the US auction last night for the 3-year came out here. I'm obviously looking at the 10-year rather than, uh, shorter dated maturities just for the sake of, you know, we tend to focus on the benchmark for trading purposes. But the 10-year moved up from around 0.05 prior to the release. We saw a peak at around 15.5, so a decent 10-tick move there. Don't get me wrong, yields were already pulling back anyway through the UK, European, and US sessions. So definitely that was helping contributing to the surge back into short-term some of the equity space and, and the tech names in particular, but then was given a further bump on the 3-year auction. So just running you through what exactly happened there, um, the auction priced at 0.355%, which was well above last month's 0.19%. and was solidly, or 0.4 basis points below the 0.359% when issued. So it was definitely, uh, a million miles away from the massive tail that we saw in the 7-year auction 2 weeks ago. And a big tail for bond auctions means that there's really a lack of demand for that, that particular issue, and that bids generally are quite uncompetitive. Um, the bid-to-cover was also pretty impressive. It came in at 2.689 from 2.391 previous and was the highest bid-to-cover ratio we've had since June of 2018. Uh, then although the, um, what we call the internals of the auction were a little bit softer, generally speaking, there was just a kind of relief A lot— there's $120 billion, I think, in total coming to market in issuance this week. And, you know, just given how bad that 7-year was and the, the price drop that that saw, and just another reason for the whole higher yield move, people were a little bit apprehensive going to this first one. I would say that the 10-year auction tonight arguably is more important, just given its maturity, and that'll be at 6 PM London time. But overall, yeah, a bit of a sigh of relief for markets yesterday, and I think that did play its hand into some of the the general risk appetite that was being observed in the intraday. The whole Treasury curve, um, after the, after the complete breakdown of non-dealer community participation in last month's 7-year auction benefited from, from the news when it came out. One thing that was quite interesting that the guys at Newsquark pointed out was they said part of the underlying demand is likely to be investors seizing the attractive carry or roll, uh, attributes of the 3-year, which offers double the yield of the 2-year. So obviously, as a participant, you're going to want to lock— lock in a better yield if possible. And just given then rolling over and carries on a similar dated maturity, was this actually more functional, if you like, from an operational point of view, to kind of support demand rather than actually underlying just general appetite in some respects. So I still think there's some to play for for the 10-year tonight, and I think that definitely warrants watching as a main key event for, for the session ahead. The other, other final thing I wanted to mention on the calendar side of things is you do have the senior House Democrat Hoyer said last night that basically he anticipates the House to consider and pass the COVID-19 stimulus bill at 9:00 AM Eastern, so a bit later on this afternoon London time today. And when that bill passes in the House, it would then go straight to Biden for signing into, into place. Now, I don't really see much now with this particular situation other than the formalities, to be quite honest. So that's something to be aware of in terms of headlines. I'm sure you'll see in a few hours' time. Calendar-wise, then, the UK European morning is particularly quiet. There's nothing major happening. So that takes us into the US session where there is, which is really the US CPI numbers at 1:30, where the expectation here for the headline is at 1.7% against expectations of 1.4%. Again, the core readings will be quite important. The headline, how influenced is it being from just generally surging oil prices that we've had of late? But just again, given the sensitivity to inflation and subsequently then yields, reactions It's definitely worth keeping your eye on the CPI data at 1:30 and the bond auction at 6 PM. You've then got the Bank of Canada rate decision at 3 o'clock, and you've got the oil inventories from the Department of Energy at the regular time of 3:30 as well. Um, and that is it. So gonna leave it there, let you guys get on with the day. Any questions at all, just feel free to drop me a comment if you're watching this on YouTube. Happy to help. And thank you for getting us to over 20,000 subscribers now on the channel. Massively appreciated. And then otherwise, for the community, I'll see you online in the Discord room. Thanks very much, guys. Have a good day.
