Financial Markets Today: Quick Take – April 26, 2022 Financial Markets Today: Quick Take – April 26, 2022 Financial Markets Today: Quick Take – April 26, 2022

Financial Markets Today: Quick Take – April 26, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Market sentiment stabilized yesterday ahead of the heart of earnings season kicking off today, with the slide in the Chinese renminbi halted after official moves signaled some support for the currency. Still, the threat of Covid lockdowns looms in Beijing with tens of millions set for testing. Elsewhere, Elon Musk is set to take Twitter private in a debt-heavy deal, oil rebounded from a deep sell-off and gold has tested existential support.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - S&P 500 futures tested the 4,200 level yesterday as we highlighted was possible but found quick support before bouncing back to close above Friday’s close. That is a short-term positive signal but earning releases this week can still wreck this rebound trade, so we expect volatility to remain high over the coming days.

Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) - with another round of supportive rhetoric from central bank officials and pledge from the State Council to boost domestic consumption, markets found a bid in morning trading but their gains pared in the afternoon. Hang Seng Index was up 1.5% while CSI300 was down modestly. Chinese mega cap internet names traded in Hong Kong and retailers traded in the mainland were among the top gainers. HSBC reported in-line earnings, but common equity tier 1 (‘CET1’) capital ratio came at 14.1%, down 1.7 per centage point from 4Q21. Share price fell over 3%.

Stoxx 50 (EU50.I) - signals from PBOC to support the Chinese economy and better than expected earnings from HSBC, UBS, Santander, and a FY profit guidance increase from Maersk are lifting equity sentiment with Stoxx 50 futures trading around the 3,735 level in early trading hours. That puts European equity futures back into the trading range from the past two weeks, but technically European equities remain weak it requires good news from earnings, China, and the war in Ukraine to move things higher.

GBPUSD and USD/commodity currency and USD/EM pairs – with some relief in risk sentiment yesterday, the US dollar rally eased after first having extended its strength earlier in the day. As noted below, much of the force of the recent move has been linked by a jolt higher in USDCNH, which after a long period of quiet is finally catching up to the broader picture of USD strength and adding to that USD strength elsewhere. The weakest of currencies against the greenback in recent sessions have been commodity-linked, EM and Asian currencies with a significant exposure to China, but also sterling, which has suffered a vicious sell-off as the outlook for the UK economy rapidly deteriorates amidst soaring cost-of-living headwinds, cratering confidence, supply-side limitations, and massive external deficits. GBPUSD traders may eventually eye the ultimate support of 1.2000.

USDCNH at the center of the recent violent extension of the US dollar rally has been a marked weakening of the Chinese renminbi, which has come after a long period of extreme quiet even as volatility picked up elsewhere. Yesterday, China moved to cut the reserve-ratio-requirement for Chinese banks’ forex reserves by 1% (to 8% from 9%) to increase the supply of USD, a gesture suggesting that the recent pace of CNY devaluation has proceeded more rapidly than desired. The PBOC overnight promised targeted support for the economy, but the concerns linked to China’s zero-Covid strategy and threat weighs of a lockdown of Beijing similar to the recent experience in Shanghai. 

Gold (XAUUSD) trades back above $1900 supported by higher oil prices and a softer dollar. This following a two-day sell off that was triggered by aggressive US rate hike signals and a sharp drop in silver (XAGUSD) on growth concerns. With support around $1890 holding once again the yellow metal needs a break above support-turned-resistance at $1915. The Fed is currently on a collision course with the PBoC which needs to add stimulus on mounting growth fears, and it raises the question of whether the FOMC will be able to hike rates as aggressively as expected by the market. Until that question gets answered, the market is likely to get its directional input from oil (inflation and geo-risk gauge) as well as developments in China.

Crude oil (OILUKJUN22 & OILUSJUN22) bounced back following a two-day decline that briefly saw Bent crude dip below $100. A lockdown related drop in Chinese demand for fuel together with the prospect of a rapid succession of US rate hikes to curb growth have been the focus this past week. However, with the supply picture being as tight as it currently is, especially with Europe considering a ban on Russian crude imports, any signs of an improve situation in China would attract a renewed bid. Until then these major opposing forces are likely to keep the market rangebound and nervous. In Brent, only a break below $98 would signal additional and potential deep losses from technical selling. Resistance just above $106.50 where the 21- and 50-day moving averages meet.

US Treasuries (IEF, TLT) were sold late yesterday after posting a new 1-week low in yields, taking the yield for the 10-year benchmark back into the range above 2.82%. The high for the cycle in that important yield has been just above 2.95% - with 3.00% perhaps a psychological resistance ahead of the 2018 high near 3.26%.

What is going on?

US planting progress and crop conditions continue to highlight a challenging situation. A weekly report released Monday showed corn planting (CORNDEC22) had advanced by 3% to being 7% complete, the slowest pace in almost ten years and trailing last year’s pace of 17%. Winter wheat rated good/excellent dropped 3% to 27% and was near the worst on record. The planting delays and conditions have been caused by the weather being too cold, too wet, or a combination of both. Big grain harvests in North America are needed this year after Russia’s invasion of Ukraine has reduced shipments out of the Black Sea, from where 25% of the global wheat export originates, while raising doubts about this year’s crop production in Ukraine.

Twitter board agrees with Musk on deal. The two parties agreed yesterday with a purchase price of $54.20/share translating into a takeover market value of $44bn and part of the deal is massive use of debt which multiplied with the current interest rates will eat most of Twitter’s immediate operating profits, but since the company is going private the profit generation is no longer the main objective. Our view is that Musk’s acquisition of Twitter could be a problem for Tesla going forward as governments may use Musk’s ownership of Twitter against him in negotiations with Tesla.

Bank of Canada Governor Tiff Macklem says BoC considering 50 basis point hike. In testimony before Parliament, Macklem admitted that the BoC “got some things wrong” in its policy mix, voiced concern about broadening price pressures and guided for further tightening. Bank of Canada rate expectations were actually slightly lower yesterday, with CAD moves of late, at least in USDCAD, yesterday more correlated with risk sentiment and crude oil prices. The Bank of Canada is already priced to hike at least 50 basis points at each of its next three meeting.

USDJPY lacks direction ahead of BoJ meeting on Thursday. The Japanese yen gains yesterday and overnight were capped by a rebound in US treasury yields. Japan finance minister Suzuki said that there is no truth to the media report on Japan/US discussion on joint FX intervention. While there may be room for a further fall in USDJPY given the outsized gains we have seen so far, policy divergence between the Fed and Japan remains the key theme and any BOJ policy tweak this week remains on watch.

US earnings recap. Coca-Cola beat expectations yesterday and is seeing higher revenue growth than what analysts had expected suggesting analysts are behind the curve on inflation dynamics and what it means for revenue growth. Activision Blizzard also reported earnings yesterday, which is part of the entertainment industry, and reported worse than expected figures with revenue especially disappointing at $1.48bn vs est. $1.81bn.

IMF warns on Asia stagflation risk. IMF has said that the Asian region faces stagflationary outlook with growth being lower than previously expected and inflation being higher. The larger-than-expected slowdown in China due to prolonged or more widespread lockdowns, longer-than-expected slump in the property market, constitutes significant risk for Asia. Monetary tightening will be needed in most countries, with speed of tightening depending on domestic inflation developments and external pressures.

IFO April German business confidence surprises on the upside. The headline index was up at 91.8 versus an estimated 89.0. The current assessment index is moving upward too, at 97.2 versus estimated 95.9. Finally, the expectations index is out at 86.7 versus estimated 83.5. This is very positive, of course. But we think optimism will not last. There are several factors which will negatively impact the German economy in the coming months: the possible new cold war, prevalent supply chain disruptions, higher energy bills, the acceleration of deglobalisation etc. All of this will have negative consequences on the German export industry. Be ready for worse data in the coming months.

Inflation is hitting the UK consumer hard. According to the latest ONS survey, 43 % of UK households said they encountered difficulties paying their energy bill in March and 43 % say they will probably be unable to save in the next twelve months. These data are compared with a year ago. Expect UK consumption to fall sharply in the coming months. The likelihood of a recession is increasing, of course.

What are we watching next?

Risk of further Chinese Covid lockdowns. The current focus in China as Covid spreads there is Beijing, where partial shutdowns were already ordered yesterday of one region of the city, but with mass testing of 20 million Beijing area residents set to begin. The province of Inner Mongolia is also a focus on concerns that Covid-related disruptions are set to reduce rare earth metal production there.

Technology earnings and their profit margins. Net profit margins are confirming their downtrend in Q1 according to preliminary earnings data, but technology companies measured by the Nasdaq 100 are seeing less impact on margins from rising input costs. As technology companies are the biggest constituents in the main indices it crucial how these companies perform on earnings this week, but also that they can demonstrate less impact from inflation. The first test of this thesis is tonight with earnings from Microsoft, Alphabet, and Visa.

Earnings Watch. Today’s earnings focus is on Microsoft, Alphabet and Visa which are all reporting after the US market close, which is the first real test of the US technology sector for the Q1 following preliminary disappointments from Netflix and yesterday’s Activision Blizzard earnings.

  • Today: Kweichow Moutai, Ganfeng Lithium, First Quantum Minerals, Tryg, FANUC, Canon, HSBC, Banco Santander, Iberdrola, Atlas Copco, Novartis, UBS Group, Kuehne + Nagel, Microsoft, Alphabet, Visa, PepsiCo, UPS, Texas Instruments, Raytheon Technologies, General Electric, Mondelez, Chubb, 3M

  • Wednesday: LONGi Green Energy, Teck Resources, DSV, Novozymes, Kone, Dassault Systemes, STMicroelectronics, Deutsche Bank, BYD, China Shenhua Energy, China Petroleum & Chemical, UniCredit, Keyence, GlaxoSmithKline, Lloyds Banking Group, Yara International, Iberdrola, Assa Abloy, SEB, Credit Suisse, Meta, Qualcomm, Amgen, Boeing, PayPal, ServiceNow, Ford, Southern Copper

  • Thursday: Nokia, Sanofi, TotalEnergies, Denso, Hitachi, Barclays, Nordea, Apple, Amazon, Mastercard, Eli Lilly, Thermo Fisher, Merck, Comcast, Intel, McDonald’s, Linde, Caterpillar, Hershey, Twitter

  • Friday: ICBC, China Yangtze Power, Midea Group, WuXi AppTec, TC Energy, Imperial Oil, Orsted, Neste Danske Bank, BASF, China Construction Bank, Agricultural Bank of China, Ping An Insurance, COSCO Shipping, Eni, AstraZeneca, BBVA, Hexagon, Exxon Mobil, Chevron, AbbVie, Bristol-Myers, Honeywell, Colgate-Palmolive

Economic calendar highlights for today (times GMT)

  • 0900 – ECB’s de Cos to speak
  • 1040 – ECB's de Cos to speak
  • 1200 – Hungary Central Bank Rate Decision
  • 1215 – ECB's Villeroy to speak
  • 1230 – US Mar. Preliminary Durable Goods Orders
  • 1300 – US Feb. S&P CoreLogic Home Price Index
  • 1400 – US Apr. Conference Board Consumer Confidence
  • 1400 – US Apr. Richmond Fed Manufacturing Index
  • 1400 – US Mar. New Home Sales
  • 0130 – Australia Q1 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

  • Macro: Sandcastle economics

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

    Read article
  • 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
  • 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
  • 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
  • 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 (Schweiz) AG
The Circle 38

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.