Saxo Spotlight: What’s on investors and traders radars this week?
Macro

Saxo Spotlight: What’s on investors and traders radars this week?

APAC Strategy Team

Summary:  August begins with another busy week on economic data and corporate earnings. The market’s main focuses will be the ISM surveys in the U.S. and PMIs from the eurozone and China, plus Friday’s U.S. employment report. Bank of England, Reserve Bank of Australia, and Reserve Bank of India are expected to raise policy rates hoping to put inflation under control. Investors will monitor Fed speaks scheduled for this week for further insights into the inflation vs. Recession debate, while the OPEC+ output schedule will be on watch.

July nonfarm payrolls to re-confirm a tight labor market

The continuous increase of the four-week moving average of initial and continuous claims may be pointing to somewhat moderation in job growth but the increases in claims are still below the levels that are generally associated with job losses or a rise in the unemployment rate.  The labor market remains tight. Bloomberg survey forecasts a 250,000 gain in non-farm payrolls for July, unemployment rate unchanged at 3.6%, and average earnings rising at 0.3% MoM or 4.9% YoY. The higher-than-expected PCE data on Friday has once again boosted the case for higher-for-longer inflation, and a steady surge in wage inflation will only just push that rhetoric further.

Looking for insights into the Fed’s thinking on the post July FOMC market reactions

Equity markets soared and financial conditions eased after the July 27 FOMC, continuing the trend that has been in place since the June Fed meeting. The market has since been pricing in lesser rate hikes for the remainder of the year and higher probability for cuts in early 2023. This is contrary to what chair Powell’s repeated reference to the policy rate path in June Summary of Economic Projections during the press conference after the July meeting.  Chicago Fed president Charles Evans (non-voter this year) and St. Louis Fed president James Bullard (voter) are scheduled to speak on Tuesday and Fed governor Loretta Mester will speak on Thursday.  Investors are likely to pay close attention to their remarks for insights into the Fed’s thinking, and to build further views on the inflation vs. Recession argument. 

US ISM manufacturing and services surveys

The S&P flash manufacturing PMI moderated 0.4pp to 52.3 and regional Fed surveys were mixed. Bloomberg survey for July ISM manufacturing index – scheduled for release on Monday – has a median forecast from economists at 52.0, down from 53 a month ago. ISM services index – scheduled for release on Wednesday – may come with an even bigger decline as the S&P flash services PMI and surveys from regional Fed were weak. Bloomberg survey for July ISM services index has a median forecast of 53.7, down 1.6pp from June. That will continue to suggest that the post-pandemic services demand is easing, further weighing on the growth outlook for Q3.

Bank of England, Reserve Bank of Australia, and Reserve Bank of India decisions ahead

Central banks are expected to chase from behind aggressively to tame inflation. Economists, as surveyed by Bloomberg, are expecting the Bank of England (BOE) to tighten its policy rate by 50bps to 1.75%. The Reserve Bank of Australia is expected to rate its cash rate by 50bps to 1.85% this week - but we think a hike of 0.75% is plausible given the hotter than expected ‘trimmed’ CPI data that was released (and the trimmed CPI data is what the RBA look at). Likewise, the Reserve bank of India is expected to raise the policy repo rate by 50bps, brining it the 5.40%.

Thursday’s Bank of England decision may see a split vote for a 25/50 bps rate hike, but with inflation touching 9.4% y/y in June and seen rising to 12% in the winter months suggests room for a stronger action. Growth outlook is softening, which may mean that the pace of tightening is set to slow after August.

China PMIs disappoint, Caixin PMI ahead

The official China NBS manufacturing PMI released on Sunday July 31 surprised to the downside and declined to 49.0 back to the contractionary territory (vs consensus: 50.3; June: 50.2).  Non-manufacturing PMI came at 53.8 (vs consensus 53.9; June 54.7).  The Caixin manufacturing PMI, being scheduled to release on Monday, is expected to moderate to 51.5 in July from 51.7 in June according to Bloomberg. Given the much weaker-than-expected NBS manufacturing PMI and the freight and logistic data indicating slow resumption of activities in the coastal regions, the Caixin manufacturing PMI may at risk of missing expectations and coming at a much weaker number. The median forecast from Bloomberg’s survey suggests that the Caixin services PMI to slightly decline to 54.0 in July from 54.5 in June.

Southeast Asia inflation to show broadening price pressures

Key southeast Asian countries like Indonesia, the Philippines and Thailand report inflation numbers for July in the week ahead. Headline inflation has been running hot across the region, with Indonesia’s headline inflation above the target of 2-4%. While food and fuel remain the key drivers, inflation pressures are broadening with demand-pull factors in play as well given the regional reopening. Thailand is experiencing strong price pressures from high commodities costs, weaker baht, reopening and return of more tourists.

OPEC+ spare capacity questions linger

With the demand destruction fears somewhat at ease, the focus is shifting back on supply constraints in commodities. OPEC and its allies meet on August 3 to decide on the group’s output levels for September. With the group having under-impressed on the production roadmap for now, any increases in targets may remain underwhelming. A decision not to raise production would also disappoint, especially after President Joe Biden visited Saudi Arabia this month hoping to strike a deal on oil production.

More earnings to come

While the busiest earnings week for the season may has passed without any major shocks, we have another heavy week ahead of us. In the week ahead, there are 148 S&P 500 companies reporting earnings in a variety of sectors including energy (Occidental, Cheniere Energy), travel (Uber, Airbnb, Booking Holdings, Expedia), semiconductors (Advanced Micro Devices), ecommerce (Starbucks, eBay) and healthcare (Moderna, Eli Lilly, Gilead Sciences, Amgen). Key themes to focus on will include consumer demand patters, supply chain issues and the impact from a stronger dollar.

Key economic releases & central bank meetings this week

 

Monday Aug 1

U.S.: ISM manufacturing (Jul)Eurozone: PMI manufacturing (Jul)
Eurozone: Unemployment rate (Jun)
China: Caixin manufacturing PMI (Jul)

Hong Kong: GDP (Q2, Adv)
South Korea: Exports (Jul)
Indonesia: CPI (Jul)

Tuesday Aug 2

U.S.: JOLTS job openingsn 
Australia: RBA policy meeting
South Korea: CPI (Jul)

Wednesday Aug 3

U.S. ISM servicesn(Jul)
Eurozone: PMI services (Jul)
Eurozone: Retail sales (Jun)

Thursday Aug 4

U.S. Initial & continuous jobless claims
U.S. Trade balance (Jul)
U.K.: BOE monetary policy committee meeting

Friday Aug 5

U.S.: Nonfarm payrolls, unemployment rate & average hourly earningsn (Jul)
Japan: Consumer spending (Jun)
Japan: Total cash earnings (Jun)
Japan: Economic coincident index (Jun)
Singapore: Retail sales (Jun)
India: RBI policy meeting
Taiwan: CPI (Jul)
Indonesia: Real GDP (Q2)
Philippines: CPI (Jul)
Thailand: CPI (Jul)

Sunday Aug 7

China: Exports, imports & trade balance (Jul)

Key company earnings releases this week

Monday Aug 1

HSBC(00005:xhkg/HSBA:xlon), Activision(ATVI:xnas), Heineken(HEIA:xams), Baidu(09888:xhkg/BIDU:xnas), Devon Energy(DVN:xnys), Shimao Services(00873:xhkg), Raffles Medical(BSL:xses)

Tuesday Aug 2

Advanced Micro Devices (AMD:xnas), S&P Global(SPGI:xnys), Caterpillar(CAT:xnys), PayPal(PYPL:xnas), Starbucks(SBUX:xnas), BP(BP:xlon), Gilead(GILD:xnas), Airbnb(ABNB:xnas), Uber(UBER:xnys), Occidental Petroleum(OXY:xnys)

Wednesday Aug 3

CVS Health(CVS:xnys), Moderna(MRNA:xnas), AXA(CS:xpar), BMW(BMW:xetr), Nintendo(7974:xtks), MetLife(MET:xnys), AP Moeller-Maersk(MAERSKb:xcse), CK Infrastructure(01038:xhkg)

Thursday Aug 4

Eli Lilly(LLY:xnys), Novo Nordisk(NOVOb:xcse), Alibaba(09988:xhkg/BABA:xnys), Toyota Motor(07203:xtks), Amgen(AMGN:xnas), Conocophilip(COP:xnys), Ceniere Energy(LNG:xnys), Glencore(GLEN:xlon), DBS Group(D05:xses), CK Hutchison(00001:xhkg)

Friday Aug 5   

EOG Resources(EOG:xnys), London Stock Exchange(LSEG:xlon), Deutsche Post (DPW:xetr), Suncor Energy(SU:xtse)


Disclaimer

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 (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
Beethovenstrasse 33
CH-8002
Zurich
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

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.