Financial Markets Today: Quick Take – September 1, 2022 Financial Markets Today: Quick Take – September 1, 2022 Financial Markets Today: Quick Take – September 1, 2022

Financial Markets Today: Quick Take – September 1, 2022

Macro 6 minutes to read
Saxo Be Invested
Saxo Strategy Team

Summary:  Risk sentiment weakened yesterday as US treasury yields rose despite the US August ADP payrolls data in the US suggested weak payrolls growth. Crude oil prices continue to sell off amidst weak liquidity in the market and even as the supply situation remains strained. A fresh bout of US dollar strength is a major contributor to weak global sentiment, as GBPUSD threatens the cycle low since the 1980’s and USDJPY teases cycle highs.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)

S&P 500 futures extended their decline yesterday closing for the second straight day below its 50-day moving average failing to push above the 4,000 level. This morning the index futures are trading around the 3,931 level with support levels coming in around the 3,900 level. ADP employment figures for August disappointed yesterday and overnight both South Korea and China PMI figures for August came in lower than expected suggesting the economy is continuing to cool down. The Chinese authorities have also decided to lock down Chengdu due to Covid outbreaks underscoring the potential risks to global supply chains as winter is approaching in the Northern Hemisphere.

Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg)

Hang Seng Index dropped by 1.6%, dragged down by autos and Chinese internet stocks on fear of off-loading by investors. BYD (01211:xhkg) plunged another 4.8%, falling for the third day in a row since the news about Berkshire Hathaway’s reducing its stake to less than 20%. A story in the Financial Times about a soft target of Tencent to sell down its stakes in Meituan (03690:xhkg) and Kuaishou (01024:xhkg) among others, sent the share prices in Meituan and Kuaishou 4.7% and 1.8% lower respectively. Caixin manufacturing PMI fell more than expected to 49.5, into contractionary territory. The output sub-index decreased to 50.2 from 52.0 and the new orders sub-index fell to 48.9 from 50.30.  The CSI 300 Index was flat.

USD strength steals back the narrative

The USD waxed stronger again yesterday as US treasury yields rose, even as the private ADP payrolls data for August showed disappointing growth. The late move higher in US yields yesterday has come back to haunt the yen, with the Bank of Japan still committed to keeping its 10-year yields capped at 0.25%. USDJPY rose to fresh 24-year highs of 139.69 in the Asian session and heading above 140 unless we see some verbal intervention coming through from the Japanese officials today. EURUSD continues to tread water near parity, as the ECB has bought some credibility with rate tightening signals and energy prices have likewise brought some relief to the single currency. Elsewhere, commodity currencies are weak versus the US dollar as well as oil prices have taken a significant hit in recent days. Next key event risks for the US dollar include today’s ISM Manufacturing survey for August, but more importantly tomorrow’s payrolls and earnings data and the September 13 August CPI print.

GBPUSD posts weakest monthly close since 1985

The sterling decline has gathered pace as the currency has weakened sharply against a resurgent Euro thiw week, with the UK looking rather isolated ahead of a winter beset with cost of living challenges from soaring power and natural gas prices. The monthly close yesterday at 1.1622 was more than 500 pips below the prior low monthly close since 1985 of 1.2146. Only the 1.1412 intraday low posted during a brief wipeout during the pandemic outbreak of early 2020 bars the path lower from here.

Crude oil prices (CLV2 & LCOV2)

The energy sector led losses across the commodity sector on the final day of the month with diesel, gasoline and crude oil all seeing additional weakness on top of Tuesdays slump. Growth concerns, the prospect of an Iran nuclear deal, a reversal in EU gas prices, and a recent jump in speculative longs are all drivers which together with lower liquidity explains the near ten-dollar two-day reversal in WTI and Brent. This is despite a sizable weekly drop in US stocks and OPEC+ potentially discussing a production cut when they meet on Monday. Further volatility can be expected in European gas prices over the coming days, and that could spill over to crude oil as well. In addition, a US-led plan to cap the price of Russian crude continues to attract some attention.

EU Gas and power traded lower for the third day on Wednesday

... as the market adopted a more sanguine view on the current lock down of the Nord Stream 1 after Gazprom signaled it would reopen at 0100 GMT on September 3. German one year forward power prices meanwhile has almost halved since briefly trading above €1000/MWh on Monday, driven lower by lower gas prices and signs the EU is preparing to intervene and adjust the price setting of power prices within the region. The recent turmoil has also added fuel to concerns trigger happy speculators with deep pockets – the initial margin on one German Year ahead futures contract is around €1.8 million - have been able to drive prices to levels unjustified by current fundamentals, only to dump positions once panic buying dried up. With EU storages filling up and provided gas returns via NS1 we could see gas prices drop below €200/MWh, a level still high enough to support rationing.


Gold has fallen to a six-week low just above $1700 as momentum sellers maintain the upper hand amid expectations the Federal Reserve and other central banks will keep raising interest rates aggressively to curb runaway inflation. Silver (XAGUSD) meanwhile has slumped to a two-year low with the risk to global growth, especially in China, hurting industrial as well as semi-industrial metals.  While gold has yet to challenge, let alone break key support around $1680, silver has slumped and may not find the next level of support before $17.25. Silver’s horrible Wednesday was partly driven by the 4.3% top to bottom slump in copper as the recently established correlation between these two metals remains. Investment metals may struggle as long as the market believes the Fed will be successful in combatting inflation and until there is a major correction in the dollar and bond yields.

What is going on?

Eurozone August CPI continues to climb

According to the preliminary estimate, it was out at 9,1 % year-over-year versus prior 8,9 % and expected 9,0 %. The core CPI, which is highly watched by the European Central Bank (ECB), is still uncomfortably high at 4,3 % year-over-year. This is likely that double-digit inflation in the eurozone will become a reality by year-end. The Bundesbank has already warned that German inflation could peak around 10 % year-over-year in the coming months. Expect a lively debate among the ECB Governing Council about the pace of tightening on 8 September. Several governors are leaning towards an aggressive hike (meaning 75 basis points while a minority of governors and the ECB chief economist Philip Lane would prefer a step-by-step increase in order to take into consideration the risk of recession.

US August ADP: weak payrolls growth, but strong wage growth

The market knee-jerked weakly in response to this data point, but has never known how to treat this data point relative to the official survey, especially now that the ADP payrolls survey is using a new methodology, although one that could eventually show it providing a better picture of the US labor market situation than the official BLS survey. In a statement released with the data, the ADP noted a “shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals.” The ADP also reports pay data, with August marking a +7.6% rise in YoY pay, which is similar to readings since the spring. “Job-changers” have seen pay rising +16.1% YoY in August.

Fed’s Mester calls for over 4% Fed funds rate
Cleveland Fed President Loretta Mester, an FOMC voter this year, argued in favor of the Fed raising the policy rate to above 4% early next year and then holding it there, while also clearly calling for no rate cuts in 2023. On inflation, Mester noted it is too soon to say inflation has peaked and wage pressures show little sign of abating, while the fight against inflation will be a long one. This message should get stronger if jobs, and more importantly CPI, data continues to be strong. At the same time, we now have Quantitative Tightening heading to its full pace and Mester said that balance sheet reduction could take three years or so.

Australian manufacturing data falls, pressured by higher rates, wages, and scarcity of staff

Two sets of weak Australian manufacturing data were released today. Manufacturing data from AI Group showed activity fell into contractionary territory, following six months of expansion. Australian PMI fell to 49.3 in August, triggered by slower growth in factory activity from higher interest rates and wages, and a lack of workers. The other set of manufacturing data released from S&P Global, showed manufacturing fell to a reading of 53.8 in August, down from 55.7 in July. Significantly, the reading was revised lower from the flash (preview reading) and was the lowest read in a year.

MongoDB shares plunge 19% on Q2 results

The fast-growing database software provider saw its shares plunge 19% in extended trading despite better-than-expected Q2 revenue and an upward revision to its fiscal year revenue to $1.20-1.21bn vs est. $1.17-1.19bn, but its FY EPS guidance of a loss of $0.28-0.35 was significantly higher than the estimated loss of $0.20. Somehow MongoDB’s management has not got the message from the market and investors that profitability is prioritised over revenue growth.

3M and Snap announce layoffs

Yesterday, 3M announced that it is going to lay off employees amid the slowdown in the economy and Snap (the parent company of Snapchat) said its current revenue gains of 8% are below target and will cut 20% of its workforce in a push be free cash flow positive in 2023.

What are we watching next?

US ISM manufacturing data due today

Lower prices at the pump have seemingly helped the US economy reverse from the slowdown concerns, with Chairman Powell also getting the confidence to say that the economic momentum is strong. ISM manufacturing, which is scheduled to be reported on Thursday, may reflect the weakness seen in the S&P survey, but will still be lifted by the backlog in auto vehicle production. Consensus estimates expect ISM manufacturing to cool slightly from July’s 52.8 and come in at 51.9 in August, still remaining in expansionary territory. ISM employment will also be key to watch ahead of the NFP data due on Friday.

Earnings to watch

Today’s US earnings focus is Lululemon which sits in the consumer discretionary sector and thus is feeling not only the pressure from inflation and supply chains, but also consumers that might be cutting back on discretionary spending due higher cost-of-living costs driven by the global energy crisis.

  • Today: Pernod Ricard, Broadcom, Lululemon Athletica, Hormel Foods
  • Friday: BNP Paribas Fortis

Economic calendar highlights for today (times GMT)

  • 0630 – Switzerland Aug. CPI
  • 0715-0800 – Eurozone Final Aug. Manufacturing PMI
  • 1030 – ECB's Centeno to speak
  • 1100 – Norway Norges Bank Governor to speak
  • 1130 – US Aug. Challenger Job Cuts
  • 1230 – US Weekly Initial Jobless Claims / Continuing Claims
  • 1345 – US Final S&P Global Manufacturing PMI
  • 1400 – US Aug. ISM Manufacturing
  • 1430 – EIA's Weekly Natural Gas Storage Change Report
  • 2300 – South Korea Aug. CPI

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

Apple Sportify Soundcloud Stitcher

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

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

    Read article
  • 350x200 althea

    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
  • 350x200 peter

    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
  • 350x200 charu (1)

    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
  • 350x200 ole

    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


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.