Details Cookies
Cookie Policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

Financial Markets Today: Quick Take – January 31, 2023 Financial Markets Today: Quick Take – January 31, 2023 Financial Markets Today: Quick Take – January 31, 2023

Financial Markets Today: Quick Take – January 31, 2023

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Markets suffered a jarring reversal in sentiment yesterday, as US stocks posted their worst session in weeks, with the Nasdaq 100 suddenly back below its 200-day moving average ahead of tomorrow’s FOMC meeting. It’s a busy three-day sprint to the end of this week, with a monthly calendar roll into tomorrow after a blistering performance for equities until yesterday, and a heavy US economic calendar and BoE and ECB meetings up Thursday.

What is our trading focus?

Equities: Reversal of fortune

Ugly session yesterday in equities with S&P 500 futures erasing the gains from the previous two sessions without any big change in interest rates or new macro releases. It was most likely a reversal of positions and the market repositioning itself ahead of crucial earnings and the FOMC rate decision on Thursday. The picture of equities almost priced for perfection remains the same with the downside risks being larger than the upside risks as leading indicators are suggesting a high probability of recession and earnings indicating significant margin compression. Today’s sentiment will be formed by earnings from UPS, Caterpillar, and Snap as the aggregate information from these earnings will provide a broad-based view of economic activity across many different sectors of the economy.

Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) extended decline

Stocks in the Hong Kong and mainland bourses extended the decline from their recent highs on a risk-off day. After the strong gains in January on the positive development in the potential peaking of the exit wave of inflection in China, traders booked their profits ahead of the U.S. Fed’s rate decision as well as fear about the risk of escalation of tension between the U.S. and China on the technology front.  A recent Politico story on the Biden administration’s plan to ban U.S. investments from investing in certain high-tech areas in China, such as AI, quantum, cyber, 5G, and advanced semiconductors triggered profit-taking in mega-cap China internet stocks heightens such concerns. The Hang Seng Index fell by 1.6% and CSI 300 Index declined by 1% as of writing.

FX: Dollar recovers as risk sentiment deteriorates ahead of Fed

The USD was broadly higher against the entire G10 pack on Monday as risk sentiment was hurt by higher-than-expected Spanish inflation fuelling concerns on global inflation remaining higher-for-longer. Mid-2024 Fed rate expectations are up some 37 basis points from less than two weeks ago, for example. Lower commodity prices and weak AU Retail Sales also fuelled some profit taking in AUDUSD which is now testing the support at 0.7050. EURUSD made another attempt at breaking above 1.0900 yesterday as ECB rate hike bets picked up further after the hot Spanish CPI release, but retreated below 1.0850. GBPUSD also slid to 1.2350 as the UK is the only G7 economy the IMF forecasts will suffer a recession this year. Higher yields saw USDJPY back above 130.50 at one point overnight.

Crude oil (CLH3 & LCOH3) slumps as speculators cut positions

Crude oil prices tumbled further on Monday with Chinese demand, tomorrow’s Fed meeting and the stronger dollar in focus.  On balance the outlook for crude oil demand looks supportive as China recover while the supply outlook remains uncertain with the upcoming threat to supply from the next round of sanctions against Russian sales of fuel products. However, having failed to break resistance in the $89 to $90 area in Brent last week, speculators have started to sell some of the 127 million barrels they bought during a two-week period to January 24. The trigger has been the stronger dollar ahead of Wednesday’s FOMC meeting. An OPEC+ monitoring meeting on Wednesday as well is expected to recommend no change in production. Brent is testing support at $83.90, the 21-day moving average, with a break signalling further loss of momentum and long liquidation.

Gold (XAUUSD) strength being tested

Gold trades lower for a fourth day as the dollar strengthens ahead Wednesday’s FOMC meeting which is expected to deliver a 25-basis point hike accompanied by hawkish comments in order to send home a message that cuts are not on the table anytime soon. In addition, US bond yields rose across the curve after Spanish inflation rose 5.8% instead of an expected drop to 5%, highlighting difficulties in getting the inflation genie back in bottle. Gold has rallied by more than 300 dollars since early November, thereby attracting fresh demand from traders, not least from hedge funds who held 107k lots (10.7m oz), a nine-month high, in the week to January 24. Key support remains at $1900 where the trendline from the November low and the 21-day moving average meet. Below, the market may focus on the 38.2% retracement level at $1822.

Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) yielding few clues amidst tight ranges

U.S. yields are coiling within tight ranges, wary of a Fed that may express disapproval at tomorrow’s FOMC meeting of the drastically easing financial conditions over especially the last several weeks, now the easiest according to the Chicago Fed’s measure since March of last year. The FOMC meeting tomorrow and US macro data through Friday’s Jan. ISM Service survey and Jan. Job data will likely have a bearing on yields at the front and longer end of the curve. For the 10-year yield, the 200-day moving average is creeping into the picture from below, now coinciding almost exactly with the cycle low of 3.32% from mid-Jan.

What is going on?

China’s PMI data bounced back to the expansionary territory

China’s manufacturing PMI bounced back to 50.1 in January from 47.0 in December as economic activities have picked up as expected. Non-manufacturing PMI rose more strongly than expected to 54.4 in January from 41.6 in December. The services sub-index jumped to 54.0 driven by the release of strong pent-up demand for in-person services, particularly dining, tourism, and entertainment. The construction sub-index improved to 56.4 from 54.4. The headline new orders index surged to 52.2 from 39.1, while the business activities expectation index rose to 64.9, a decade high

IMF expects China to grow at 5.2% in 2023 and 4.5% in 2024

In its World Economic Outlook Update released today, the IMF expects China’s real GDP growth to be at 5.2% in 2023 and then to fall to 4.5% in 2024. The medium-term growth rate in China is expected to settle at below 4% due to “declining business dynamism and slow progress on structural reform”.

Spanish CPI for January prints far higher than expected

It is perhaps too early for the European Central Bank (ECB) to pause. In January, Spain’s Consumer Price Index (CPI) rose 5.8 % year-on-year. This is higher than in December (5.7%). This is also the first increase since July – something which might worry the ECB a bit. Core inflation (which strips out volatile elements) is not improving as hopes either. It was out at 7.5 % year-on-year in January versus the prior 7.0 % in December. Remember that history is littered with central banks who declared victory over inflation too soon. The ECB does not want to make a similar mistake.

Samsung and NXP Semiconductors earnings recap

NXP Semiconductors reported earnings last night after the US market close with Q4 revenue and earnings in line with estimates while Q1 revenue outlook of $2.9-3.1bn misses estimates of $3.2bn pushing down the shares down by 3% in the extended trading. Samsung Q4 earnings release show significant margin pressure with Q4 operating profit at KRW 4.3trn vs est. KRW 5.8trn due to pricing pressures across some businesses including the memory chip business. Samsung expects demand for chips to fall in the first half of the year in its foundry business, but then sees a recovery in the second half.

Mixed messages for Australian dollar: Coal cargoes head to China, but retail sales slump and borrowing disappoints

With commodity prices falling across the board from their highs, and the DXY rising, the Australian dollar continued its 3-day pullback, falling below the 200-day moving average. Adding to the negative short-term picture, weaker than expected Australian retail trade for December (with sales down 3.9% MoM), along with weaker than expected borrowing added to the woes. The weak data is pushing RBA expectations for another rate hike next week lower. More Aussie supportive was the news of two cargos of Australian metallurgical coal making their way to China’s steel production centre, officially ending China’s two-year Australian coal ban. BHP struck the deal with China Baowu Steel earlier this month. The other major miners see China picking up iron ore demand through 2023.

What are we watching next?

Market conditions finally blink ahead of tomorrow’s FOMC meeting

The FOMC meeting tomorrow was meant to confirm the Fed’s further downshift in the pace of its rate hikes with a 25-basis point rate hike and offer few surprises. The anticipation of the Fed reaching peak rates after a presumed additional 25 basis point hike at the March or May FOMC meeting has seen the an at times aggressive back-up in risk sentiment, with a powerful easing of financial conditions The Fed continues to object to the market’s expectation of an eventual rate cutting campaign set to begin by later this year, and it may attempt to surprise somehow on the hawkish side after especially the latter part of the “higher for longer” message from the Fed has been ignored. What does that look like? Difficult to say: a 50 basis point move would be bold but would come as a profound shock to markets. Perhaps the most hawkish message the Fed can deliver on rates would be a refusal to guide for an end of the rate-hike cycle just yet, somehow noting that financial conditions are too easy for it to consider that its policy is sufficiently tight. Yesterday’s chunky back-down in sentiment, the monthly calendar roll and a busy economic US data calendar are other important factors in the mix through this Friday.

The Adani saga poses some key questions on India for foreign investors

India’s corporate governance has come back in focus with the Adani rout, alarming foreign investors who had been looking at India as a potential long-term opportunity especially with a shift away from China. While the extent of collateral damage can be contained and Modi’s popularity will be protected by a lack of coherent opposition, the key concern is how deeply the investor confidence gets dented and whether markets start to question India’s premium valuation. Read our Market Strategist Charu Chanana’s full report here.

Earnings to watch

Key earnings day coming up today with our focus on earnings from UPS, Caterpillar, and Snap as these companies typically move markets due to their cyclicality; read our earnings preview from yesterday here. Other key earnings to watch today are from ExxonMobil, McDonald’s and Marathon Petroleum which will provide insights into the global energy sector and especially the market for refined products and availability. We are especially curious about whether energy companies are accelerating their capital expenditures.

  • Today: Canadian Pacific Railway, Daiichi Sankyo, Fujitsu, UBS Group, ExxonMobil, Pfizer, McDonald’s, UPS, Caterpillar, Amgen, AMD, Mondelez, Marathon Petroleum, Electronic Arts, Spotify, Snap
  • Wednesday: Novo Nordisk, Orsted, Keyence, Hitachi, GSK, BBVA, Novartis, Meta, Thermo Fisher Scientific, Southern Copper
  • Thursday: DSV, Dassault Systemes, Siemens Healthineers, Infineon Technologies, Deutsche Bank, Sony, Takeda Pharmaceutical, Shell, ING Groep, Banco Santander, Siemens Gamesa Renewable Energy, Nordea, Roche, ABB, Apple, Alphabet, Amazon, Eli Lilly, ConocoPhillips, Qualcomm, Honeywell, Starbucks, Gilead Sciences,, Ford Motor, Ferrari
  • Friday: Coloplast, Sanofi, Intesa Sanpaolo, Denso, CaixaBank, Naturgy Energy, Assa Abloy, Regeneron Pharmaceuticals

Economic calendar highlights for today (times GMT)

  • 0855 – Germany Jan. Unemployment Change / Rate
  • 0930 – UK Dec. Consumer Credit / Mortgage Approvals
  • 1000 – Eurozone Q4 GDP estimate
  • 1330 – Canada Nov. GDP
  • 1400 – US Nov. S&P CoreLogic Home Price Index
  • 1445 – US Jan. Chicago PMI
  • 1500 – US Jan. Consumer Confidence
  • 2130 – API's Weekly Crude and Fuel Stock Report
  • 2145 – New Zealand Q4 Employment and Earnings data
  • 0145 – China Jan. Caixin Manufacturing PMI


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

Apple Sportify Soundcloud Stitcher


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.