Details Cookies
Important margin product information
CFDs and forex spot transactions are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor lose money when trading CFDs and/or forex spot with this provider. 0.56% of retail clients trading in leveraged products experience a negative account balance after a stop out occurred. You should consider whether you understand how CFDs, forex spot transactions or any of our other products work and whether you can afford to take high risk of losing your money.
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

Bank of Japan, ECB, Russian gas and Italy are markets’ focus Bank of Japan, ECB, Russian gas and Italy are markets’ focus Bank of Japan, ECB, Russian gas and Italy are markets’ focus

Bank of Japan, ECB, Russian gas and Italy are markets’ focus

Equities 5 minutes to read
APAC Strategy Team

Summary:  While the Bank of Japan remains committed to easy policy, the European Central Bank is expected to announce a rate hike today and measures to contain fragmentation risks. The market is watching nervously about if Russian natural gas will flow on the Nord Stream 1 pipeline.

What’s happening in markets?

US equities hit a 6 week high but momentum begins to slow as the USD rises with Italy’s government on brink of collapse

The NASDAQ100 (USNAS100.I) gained 1.6%, rising 5% in two days, and the S&P 500 (US500.I) rose 0.6%, taking its two-day rally to 3.4%. Risk sentiment remains fragile/skittish for several major reasons; the ECB is set to rise rate for the first time since 2011, maybe by 50ps (0.5%), ushering in rate hikes that we think will continue for six months. While demand destruction in the property segment continued with US home sales falling for the 5th straight month. While Europe holds its breath Russia’s Nord Stream pipeline to reopen, assuming flows will return to 40% capacity.  While for equities earnings season; the rubber hasn’t hit the road; we know 13% of the S&P500 companies have reported and average earnings growth is down 7%, while the majority of the companies are guiding for an earnings slowdown; we expect this to continue, which is why we remain bearish, expecting a pull back as fundamentals will be reassessed.

Tesla Truths. Producing a record number of EVS, but selling less, yet pledging to grow production 50%, while dumping 75% of Bitcoin to shore up cash. 

Tesla (TSLA) sold 254,695 EVs in the quarter ending June 30. That’s a 27% jump from same quarter last year, but a 18% drop from the prior quarter, meaning EV sales are slowing as demand destruction is kicking in from higher interest rates. That also means, less revenue is coming through than expected ($16.93b in Q2, vs $17.1b expected (by Refinitiv). Higher costs are also a factor and that aren’t going away either. The new factories are “gigantic money furnaces”. Although commodity prices have come down, Musk hinted you can take that with “a grain of salt” that inflation is trending lower. Meanwhile, despite Musk saying he had “diamond hands” and wasn’t selling Bitcoin, in the quarter Tesla sold $936 million worth, (75% of Tesla’s holding) to support business cashflow. Ending on a bright note;  Quarterly Earnings per share (EPS) came in a $2.27 vs $1.81 expected. Tesla shares were initially 4% higher in afterhours trade but those gains evaporated and Tesla ended up 1.5% . Although TSLA shares are in technical uptrend off their May 2022 lows, the market will need to see commodity costs come down further and revenue to rise before this rally can be validated.

Australia’s ASX200 trades flat, weighed by losses in mining and energy

The ASX cautiously holds at its highest level since June 14 as investors are parsing through weaker outlooks from Australian quarterly earnings season, while awaiting the Fed’s move on interest rates next week. There are also many holding their breath for Apple’s outlook/result next week (critically important as it’s a bell weather for consumer electronics spending, and this is the life blood to many Australia’s tech stocks, with the sector down 36% from November).Seeing downward pressure today; Rio Tinto (RIO) and Fortescue (FMG) shares fell 3%, because firstly - the iron ore (SCOA) price lost 3% falling to $97.15 with China’s steel output now expected to drop 4% in 2022, while China again stepped up efforts to import less iron ore after it formed a state backed iron ore company. This means Iron ore price volatility could continue for some time, and this will flow through to BHP, Rio and other iron ore majors shares. In other news, Woodside (WDS) shares fell 4.1% after the oil price fell back under $100. This is the world 10th biggest oil company after it took over BHP’s oil and gas assets. Woodside is still one of this years best performers on the ASX, up over 40% YTD. Today Woodside reported quarterly results; revenue rose 44% and sales up 51%, while production grew 60% thanks to taking over BHP’s assets. All beat expectations. As for what’s ahead, Woodside implied a softer second half. 

EURUSD now faces political headwinds

EURUSD retreated from 1.0273 highs printed on Wednesday as the Italian political crisis unfolded, further adding to the energy supply worries. Italian Prime Minister Mario Draghi’s government fractured as three parties boycotted a confidence vote. Draghi is expected to resign on Thursday, and if that gets accepted, that will prompt fresh elections and mean weak policy credibility until a new government comes in. This comes on the heels of an expected rate hike from the European Central Bank, which is likely to be a worry for Italian bonds as well. A test of 1.0350 resistance therefore seems unlikely now, unless the gas supply surprises on the upside. Even if we do get there, EURUSD will likely start to get worried about further recession fears sooner rather than later.

What to consider?

Bank of Japan remains committed to easy policy

The Bank of Japan (BOJ) announced its policy decision today, and there were no tweaks to its yield curve control policy as expected. Hedge funds seem to have backed down from big bets about a BOJ’s hawkish turn, while the yen stays close to its record lows. For now, the only material update was on the inflation and growth forecasts. BOJ reiterated no limit on JGB purchases. FY2022 GDP growth forecast was lowered to 2.4% from 2.9 while FY2023 was raised to 2.0% from 1.9%. It also raised FY2022 core CPI forecast to over 2%, while also raising core CPI forecasts for FY2023 and FY2024. National CPI is due tomorrow and is likely to remain above the central bank’s 2% target, and will be key as a weaker yen and high inflation is hurting consumers and may be the only trigger for Kuroda to consider a tweak during his remaining term, if at all.        

The big Russian gas supply question

Putin has signaled that gas flows on the Nord Stream 1 pipeline will be restored once the maintenance works are complete. However he has also warned that flows will remain curbed unless sanctions spat is resolved. This comes at a time when Europe is facing its worst summer. With Moscow using gas as a weapon in the war, it is unlikely that the uncertainty will go away anytime, and pressure on Europe is only going to increase into the winter.

More job cuts are coming 

Ford (F) is preparing to axe about 8,000 jobs in the weeks ahead, in an attempt to boost profits, so it can shore up its funds to move into EVs. The job cuts are will be in the unit responsible for producing internal combustion engine vehicles, as well as other salaried employees. Google (GOOGL) will pause hiring for two weeks and review its headcount, meaning job cuts could be made soon. And Lyft said it’s cut 2% of its workforce and will stop renting cars to riders.

US senate votes to approve the CHIPs Act

Chip stimulus could be coming soon. The US senate voted on $52b chip stimulus bill being passed. So now it’s over to the House of Reps to approve before White House can sign it off into law, hopefully before August 8. If passed into law, it will be a huge victory for chipmakers like Intel, Nvidia and even Apple, as they’re moving into Chip production. The Chips Act is targeted at providing funding to US semiconductors/chip manufacturers so the US produces its own Chips and phases out is reliance on importing Chinese chips.

Shipping costs are pulling back; supporting consumer spending linked companies reduce costs

There are positive signs the virus-fueled bottled necks are clearing and shipping costs are back at pre-pandemic levels. 40-foot container rate prices are now down 5.7% on the week, down 21% from the same time last year from HK to LA. 

Alcoa kicked of metal earnings in the US, and its share surge

Alcoa (AA) was the best performer afterhours in NY, up 6% after growing earnings more than expected, up 48%, while sales rose 29% in Q2. Although it produced less production than expected, which is a major theme for commodity companies this year, due to a labour shortage, Alcoa expects higher profitability for its Bauxite business as it sees demand rising. Alumina and aluminum shipments are also expected to rise. Although that will not fully offset higher costs for energy and raw materials, Alcoa committed to making an extra $500 million of share buy backs to support its share price.

Macao plans to reopen casinos

After being shut down for two weeks, Macao announces that it will reopen casinos this Saturday if conditions allow. 

China’s Emerging Industries PMI fell

China’s Emerging Industries PMI, which tracks activities of the technology industries declined to 48.2 in July from 52.5 in June. 

Sri Lanka at risk of fresh protests

Sri Lanka’s new president Ranil Wickremesinghe was voted by a majority of lawmakers from ousted leader Gotabaya Rajapaksa’s party, but that could spark further street protests and thwart any hopes of an IMF bailout given that the public discontent re-emerged. The new president, like his predecessor, is also deeply unpopular among the protesters and it is feared that democracy will not be fully restored.

Potential trading and investing ideas to consider?

Private-owned entity (POE) developers continue to face headwinds

Over the past two weeks, a large number of presale homebuyers of uncompleted projects across China collectively informed their banks of unilateral suspension of mortgage repayments until the resumption of construction of the relevant projects.  The problem highlights the dire situation of many Chinese property developers, in particular the non-state-owned ones.  For investors who want to position for any potential recovery of the Chinese housing markets, it would be advisable to stick to leading state-owned developers, such as Hong Kong listed China Overseas Land & Investment (00688:xhkg) and China Resources Land (01109:xhkg) and Shanghai listed Poly Developments (600048:xssc). For more details, please refer to this article that we sent out yesterday.


For a weekly outlook – tune in to our Saxo Spotlight.


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 (Schweiz) AG
Beethovenstrasse 33

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.