Market Quick Take - July 31, 2020 Market Quick Take - July 31, 2020 Market Quick Take - July 31, 2020

Market Quick Take - July 31, 2020

Macro 5 minutes to read
Picture of John Hardy
John Hardy

Head of FX Strategy

Summary:  The four US megacap companies Apple, Alphabet, Amazon, and Facebook were out with blowout results after the close yesterday, bringing a massive new boost to US equity futures in late trading. The success of these monopolistic companies is clearly not a sign of the health of the overall economy, and bond yields continuing lower suggest a darkening outlook. The USD, meanwhile, notched new lows for the cycle.

What is our trading focus?

US500.I (S&P 500 Index)and USNAS100.I (NASDAQ 100 Index) – the US market was weak early in the session, but then rallied later, with that rally accelerating smartly after the close in the wake of the big megacap US earnings reports all smashing expectations after the close. The Nasdaq 100 index rallied back close to the key 11,000 level it has tested twice but failed close above, while the S&P500 has only the 3,284 resistance in its rather tight range of late, with yesterday’s action underlining the importance of the downside pivot area around 3,200. The interesting question here perhaps is whether traders find the results of these monopoly companies as a good sign for the broader market when, in a shrinking economy, their results merely represent a massive market share grab. And a reminder that today marks the end of the month.

DAX.I (German DAX Index) - the German DAX index will be interesting to watch on the open yesterday after the US equity market pumped so aggressively higher in late and after hours trading yesterday. For its part, the DAX suffered a meltdown of more than 3% yesterday after the German Q2 GDP report and Volkswagen announced a dividend cut. The price action saw the index nearly touching the 200-day moving average just above 12,200.

AAPL:xnas (Apple)Apple jumped over 6% in after-hours trading after announcing strong results and a four-for-one stock split. The narrative is that many Americans used their stimulus checks to buy a new iPhone as handset sales for Apple rose 25% in the quarter when the overall market decline –14%.Quarterly revenue was at $59.7 versus consensus of $52.3 billion. 

AMZN:xnas (Amazon) - the results for Amazon smashed expectations as the company’s gambit to stay open while other businesses closed during the pandemic paid off. Year-on-year top line growth was +40% and earnings were $10.3 per share vs. Below $2/share consensus, a very strong performance, given in billions of extra spending to deal with pandemic issues.

GOOGL:xnas (Alphabet)the search giant reported a decline in year-on-year revenue of 2 percent, the first decline it has ever registered, although it did beat expectations and its modest growth fall stands in contrast to greater contraction in the advertisinindustry elsewhere.

XAUUSD (Spot Gold) and XAGUSD (Spot Silver) - most interesting in precious metals, perhaps, is to note the divergence in developments, with gold eyeing the highs for the cycle again and keeping its price action more orderly near the recent top above 1,980, while silver is churning more broadly and is back below 24 dollars  per ounce this morning, perhaps held back by the lack of follow through higher in copper prices (silver has dual industrial / precious metal aspects).The level of the close today for silver is important for the impression of the strength of the market after prices shot north of 26 dollars per ounce this week.

GBPUSD – sterling blew through the 1.3000 level after hardly a pause as the general USD rout continued, with little differentiation across USD pairs (ii.e.,, sterling strength not a particular stand-out yesterday with USD weakness doing all of the lifting in moving the pair)ness doing all of the lifting in moving the pair), save perhaps for CAD lagging badly – likely on its closer link to the US economy and USD. The next levels for GBPUSD are coming up fast, with the highest weekly close near 1.3330 and the massive pivot level of 1.3500 with implications stretching back decades not far above.

USDJPY – thpair has now taken out the 104.50 level and we watch today for whether the weekly close will manage to stay below that level for the first time since 2016 after four tests of this level since then. This could open up the next major chart focus near 100.00.If the market decides that the blowout results for tech giants are no good sign for the broader economy, and risk appetite weakens again, the USDJPY focus could intensify. As well, we note the strength in the long end of the US bond market we discuss below – as lower yields have historically been JPY-supportive.

What is going on?

US President Donald Trumpfloats the idea of delaying the US election in a tweet yesterday, claiming that mail-in voting will make the election "the most fraudulent and inaccurate in history". While it is extremely doubtful that any delay to the election will occur, given the US’ ability to hold elections during the civil war (with mail-in voting, it should be added, by over 100,000 Union troops in the active war theater) and in the second World War, Trump’s base may be unconvinced that the results are legitimate if Trump loses the election.

Bond yields plunging globally. The US long sovereign T-bonds are leading the pack, but government fixed income is strongly bid globally, suggesting a darkening economic outlook that should be noted amidst the focus on the strong results from the big four US companies yesterday. The US 10-year yield notched its second lowest level on the daily close yesterday near 54 basis points– only exceeded by a single day during the panic of March. Overnight, yields dropped another couple of basis points.

Germany reports terrible Q2 GDP estimate, France and US reports slightly above expectations. Germany estimated Q2 GDP at –10.1% vs. Expectations of –9.0%, a very weak performance, especially as virus resurgence fears are rising in recent days there. France reported an even worse –13.8% QoQ estimate this morning for the quarter, but this was actually better than the –15.2% expected.Yesterday’s US Q2 GDP estimate was out at –32.9% annualized rate, but this was slightly better than the –34.5% expected.

What we are watching next?

Are good results for monopoly US companies good for those companies’ prospects in the long run and for the broader market for even the short run?As noted above, it is tough to argue that the massively positive results for the big four US companies reporting after the close yesterday are a good sign for the broader outlook, as their strong results compound the weakness in other companies as the overall economic pie was shrinking badly in the quarter. In the popular mind in the US – but also abroad where these companies have a massive presence -these results could lead to a political backlash. In the US, this was strongly in evidence in the hearings of the four companies’ CEOs before a House subcommittee earlier this week.In addition, as noted above, the very strong bond sovereign bond markets in the US and Europe are at odds with the strength in equities yesterday and suggest a darkening growth outlook.

Where’s the new stimulus? As of today, many provisions in the US stimulus response to the COVID-19 crisis are expiring (most notably the $600 per week federal supplemental unemployment benefit), and the longer the Trump administration and Republicans can’t hammer out an agreement with the Democratic congressional opposition, the bigger the risks to the outlook for US- and global markets, not to mention the risk of public disorder in the US on lack of income and evictions of low-income renters.

Spain and Italy Q2 GDP reports– the two EU countries worst hit by the coronavirus are set to report their respective first Q2 GDP estimates today. The overall EU Q2 GDP estimate is also on tap a bit later.

Economic Calendar Highlights for today (times GMT)

  • 07:00 – Spain Q2 GDP estimate
  • 08:00 – Norway Jul. Unemployment Rate
  • 08:00 – Italy Q2 GDP estimate
  • 09:00 – Euro Zone Q2 GDP estimate
  • 12:30 – US Jun. PCE Inflation
  • 13:45 – US Jul. Chicago PMI
  • 14:00 – US Jul. Final University of Michigan Sentiment

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank 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. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

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.