Global Market Quick Take – May 3, 2023 Global Market Quick Take – May 3, 2023 Global Market Quick Take – May 3, 2023

Global Market Quick Take – May 3, 2023

Macro 9 minutes to read
Saxo Strategy Team

Summary:  US equity markets sold off heavily before cutting some of the losses into the close on further turmoil in regional US banks and after a weak JOLTS job openings survey. The JPY rallied hard after its recent weakness and gold jumped well clear of USD 2,000 per ounce as treausury yields plunged. Tonight’s FOMC meeting will be closely scrutinized for any scrap of guidance on how concerned the Fed is about the backdrop and it if firmly guides for a pause in the tightening cycle after a presumed 25-basis point hike.

What is our trading focus?

US equities (US500.I and USNAS100.I): fresh jolt to regional banks ahead of FOMC

US equities traded nervously yesterday with S&P 500 futures declining 1.2% driven by selloffs in energy, banking, and real estate stocks as steep declines in regional banks such as Western Alliance and WestPac Bancorp triggered fresh risk-off waves across all banks. This confirms that more banks could fail in the future as Charlie Munger also alluded to in a recent interview. Today’s big event is naturally tonight’s FOMC event with the market expecting a 25 basis points rate hike and then is split on what to expect on the forward guidance. For equities the most dovish signal would be if the Fed signals no more rate hikes going forward and indicating that rate cuts could come should the economy weaken further from here.

Hong Kong equities (HK50.I): decline on US stock weakness

While the mainland Chinese stock market remained closed, Hong Kong equities declined, on the back of overnight weakness in U.S stocks.  Hang Seng Index shed over 1.8% as of early Asian afternoon. Brewers, diary, and some other domestic consumption names bucked the decline. During the first three days of the five-day-long Labor Day holiday in the mainland, domestic passenger traffic surged 162% from the same holiday period last year with 160 million trips.

FX: JPY recovers as Treasury yields slide, NZD and AUD also bid

The concerns on the US jobs market as well as fresh concerns in the US banking sector sparked buying in Treasuries on Tuesday and also disrupted the pricing of the FOMC, taking the USD lower. The Japanese yen benefitted from the risk-off tone and the plunge in US yields, and USDJPY fell from highs of 137.77 to the 136.00 area in late Asian trading. EURUSD reversed back above 1.10 despite the weak Euro area bank lending survey yesterday while GBPUSD is still stuck below 1.25. Gains in AUDUSD to 0.67+ after the RBA’s surprise hike were somewhat pared while NZDUSD jumped as high as 0.6250 overnight as Q1 NZ labor data out showed the unemployment rate steady at 3.4% vs. expected 3.5% and wage inflation climbing higher.

Crude oil: sharp drop amid fresh banking sector concerns

Crude oil prices tried to stabilize overnight after tumbling 5% on Tuesday amid fresh technical momentum selling following Monday’s failed attempt to reach safer grounds above $80.50 in Brent and $76.50 in WTI. Risk sentiment in general was challenged by continued worries about the stability of the regional US banking system despite the bailout of First Republic by JP Morgan. Despite current demand and growth concerns, the Fed is expected to hike once again later today, and it continues to weigh on the demand outlook even as supply side is looking stable for now. EIA’s weekly stock report is likely to be a sideshow, even after API reported a 4m barrel inventory drop. With short sellers back in control prices may once again overshoot to the downside.

Gold (XAUUSD) holds above $2000 ahead of FOMC rate decision

Gold surged higher on Tuesday to reach its highest close since April 14 at $2016.6 after downbeat US economic data and continued concerns about the stability of US regional banks drove investors into safe-haven bonds and gold. The 2-year US government bond yield slumped more than 20 basis points while short-end rates priced in +160 bps of rate cuts before June 2024. The FOMC is expected to deliver a 25-bps rate hike today and whether they signal a pause may determine the market reaction (see FOMC review below). Support in gold at $2002 followed by $1980 while a break above $2020 could see it target the April high in the $2050 area. Silver, still suffering a hangover from Monday’s pump-and-dump action, has struggled to keep up with its industrial link also weighing on sentiment.

US Treasuries rally (TLT:xnas, IEF:xnas, SHY:xnas) on JOLTS & fresh bank turmoil

US Treasury yields cratered yesterday on a weaker than expected job opening survey and on further turmoil in US regional banks, as trading in two banks’ shares (see more below) was halted yesterday. The market has marked down the odds of a hike at today’s FOMC meeting slightly as the 2-year yield plunged some 18 basis points lower and back below 4.00%, while the 10-year benchmark posted its third consecutive day of direction changes, dropping almost 15 bps lower back to 3.42%.

What is going on?

Fresh focus on US regional bank woes

The KBW regional bank index fell more than 5% yesterday to new lows for the cycle, currently near 82 after trading above 110 before Silicon Valley Bank’s sudden failure in early March. Trading in shares of two banks, PacWest Bancorp and Western Alliance Bancorp, were halted due to aggravated intraday volatility before trading resumed. PacWest’s shares ended the day down almost 27% and are down some 75% from early March levels. Western Alliance Bancorp shares fell just over 15% on the day. Western Alliance and PacWest Bancorp have balance sheets of $71bn and $44bn respectively.

Slowing US JOLTs job opening points to more slack in US labor market

The US JOLTS survey revealed that job openings fell to 9.59m in March from a revised up 9.974m previously, falling beneath the consensus of 9.736mln. That was the lowest in nearly two years and hinted at the gradual moderation in labor demand, which had so far continued to run higher than the supply keeping the market in an imbalance. The ratio of openings to unemployed dropped further to 1.6 in March from 1.8 earlier, but still remains above the pre-pandemic level of 1.2. Today, the focus turns to the Fed decision but private ADP employment survey and the US ISM services, where the priced paid component will again be key after the jump higher in the manufacturing prices on Friday sparked inflation concerns yet again, is also due.

US earnings review: Uber, Starbucks, Ford, AMD

Expectations were set high for Uber before its Q1 earnings release, but the on-demand ride hailing company reported better than expected Q1 revenue figures up 29% y/y and beat also on adjusted EBITDA with $761mn vs est. $679mn. The Q2 guidance on both bookings and adjusted EBITDA were above consensus and shares rallied 10% during the session. The CEO said that Uber is not seeing any slowdown in food delivery.

Starbucks reported FY23 Q2 (ending 31 March) after the close with comparative sales beating estimates across all geographies, but the FY23 comparative sales growth guidance at 7-9% disappointed investors sending the shares down 5% in extended trading.

Ford Motor reported Q1 revenue of $41.5bn up 20% y/y and guided FY adj. EBIT of $9-11bn vs est. $9.5bn. The US carmaker says the operating environment is opaque but is maintaining a steady outlook and is aiming to keep inventory lean to support prices. Finally, Ford said on the earnings call that it expects to lower investments in China and expects to only cut costs by $2bn vs $2.5bn expected due to high commodity prices. Shares were unchanged in extended trading.

AMD delivered better than expected Q1 figures last night but the Q2 revenue guidance of $5-5.6bn vs $5.5bn disappointed investors and highlights the slow turnaround in PC sales. AMD also said that enterprise server sales declined substantially, but like Samsung and Intel, AMD is seeing server and PC end markets to return to growth in the second half. Shares were down 6% in extended trading.

What are we watching next?

Difficult reaction function to FOMC tonight?

While odds have shifted slightly lower after yesterday’s turmoil in risk sentiment, the Fed is still overwhelmingly expected to hike 25 basis points at the FOMC meeting tonight, with the suspense for the market centering on how willing the Fed is to confirm market expectations that this will be the last rate hike for the cycle, or at least for now. Much of yesterday’s risk off tone was on a single JOLTS job openings report that is still some 2 million jobs higher than the previous record, suggesting an overreaction. The Fed may want to deliver as little in the way of guidance as possible, keeping the door open for a pause or even an additional hike as it would likely like a look at the full April and most of May data cycles that it will have on hand ahead of the June 14 FOMC meeting, when it delivers a refresh of the economic projections.

Scenarios and reaction functions for FOMC

On the dovish side, the Fed could tout that its policy rate is now above core PCE inflation and tout signs of a less tightness in the labor market as solid reasons for pausing on further tightening for now. This would presumably lead to a risk-on rally in equities and sell-off in the US dollar if this isn’t already fully priced (arguably it is, given that market has not even fully priced today’s rate hike and anticipates more than 60 basis points of Fed easing by year-end. The more hawkish (and risk-off, initially USD-up) scenario would be a Fed that sticks to two-way messaging on guidance. We could also get a mix of few clues in the monetary policy statement, with more colour and hints from Powell’s performance at the press conference.

Earnings to watch

Today’s US earnings focus is on Qualcomm and MercadoLibre with analysts expecting Qualcomm to deliver FY23 Q2 (ending 31 March) revenue growth of -19% y/y as consumer electronics markets remain muted and EBITDA of $3.1bn compared to $4.3bn a year ago. Qualcomm is expected to report earnings after the US market close. MercadoLibre, the largest local e-commerce player in South America, is expected to report Q1 revenue growth of 29% y/y and EBITDA of $368mn compared to $252mn a year ago. MercadoLibre is scheduled to report after the US market close.

  • Wednesday: Barrick Gold, Orsted, Airbus, BNP Paribas, Deutsche Post, Enel, UniCredit, Lloyds Banking Group, Qualcomm, CVS Health, Estee Lauder, MercadoLibre, Kraft Heinz

  • Thursday: National Australia Bank, Anheuser-Busch InBev, Shopify, Novo Nordisk, Maersk, Volkswagen, BMW, Infineon Technologies, Uniper, Rheinmetall, Zalando, Shell, ArcelorMittal, Equinor, Apple, ConocoPhillips, Booking, Regeneron Pharmaceuticals, Zoetis, Becton Dickinson, EOG Resources, Ferrari, Fortinet

  • Friday: ANZ, Macquire Group, Enbridge, Canadian Natural Resources, Adidas, Intesa Sanpaolo, CaixaBank, Cigna Group

Economic calendar highlights for today (times GMT)

1215 – US Apr. ADP Employment Change

1345 – US S&P Global Final Services PMI

1400 – US Apr. ISM Services Index

1430 – US Weekly DoE Crude Oil and Product Inventories

1800 – FOMC Monetary Policy Statement release

1830 – US Fed Chair Powell press conference

0130 – Australia Mar. Trade Balance

0145 – China Apr. Caixin Manufacturing PMI


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, 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. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such 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.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

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

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.