Financial Markets Today: Quick Take – December 7, 2022 Financial Markets Today: Quick Take – December 7, 2022 Financial Markets Today: Quick Take – December 7, 2022

Financial Markets Today: Quick Take – December 7, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  The US equity market rolled over further, with the S&P 500 index crossing back below the pivotal 4,000 level, completing the rejection of last week’s rally attempt. In Asia overnight, further signs that China will continue to lift Covid restrictions failed to buoy sentiment further, with weak November export data spooking sentiment at the margin. In commodities, the major crude oil grades dropped to new lows for the cycle on demand concerns.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)

S&P 500 futures declined another 1.5% yesterday pushing briefly below the 100-day moving average before bouncing back above that average. In today’s session the 100-day moving average which sits around the 3,937 level is the important level to watch on the downside and if it breaks then the 3,900 is the next major area of gravitation. The US 10-year yield remains close to 3.5% adding no further pressure from the cost of capital side and in general the equity market is slowly transitioning into hibernation.

Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg)

After a lackluster morning session, Hong Kong and mainland China stocks rallied in the afternoon after investors took note of the no mention of dynamic zero-Covid and a more balanced tone towards economic growth in the readout of the politburo meeting. However, stocks pared their gains and more, with the Hang Seng Index and CSI300 Index reversing and losing 1% and 0.4% respectively as of writing.

The Chinese health authorities announced 10 additional measures to further fine-tune its pandemic control strategy

... and are holding a press conference later in the afternoon. Separately, China’s exports in November declined 8.7% (in USD terms) in November from a year ago, weaker than expectations. Geely (00175:xhkg) rose more than 2% as the Chinese automaker is reportedly talking to investment banks for a Hong Kong IPO of its Cao Cao Mobility ride-hailing arm.

USD stays bid on weak risk sentiment, BoJ comments overnight

A weak session for risk sentiment yesterday helped support the greenback, with treasury yields trading sideways and therefore marginalized as a factor. One of the bigger movers overnight was USDJPY, which is challenging above the important 137.50 area (prior range low) this morning after BoJ board member Toyoaki Nakamura supported the BoJ’s current easy policy, noting that the elevated inflation in Japan in the recent cycle is not wage-driven. Nakamura expressed concern that policy tightening might prompt the return of deflation. Elsewhere, USDCAD is making a bid at establishing a new up-trend, AUDUSD has posted a bearish reversal, and EURUSD & GBPUSD still need more downside to suggest a similar reversal, while all USD traders are holding their collective breath for next Tuesday’s US November CPI print and the FOMC meeting the following day.

Gold (XAUUSD) holds above support at $1765 despite dollar strength and weak risk sentiment

Stronger than expected US services data on Monday has renewed pressure on the Fed ahead of next week’s FOMC meeting, and with ETF investors still side-lined, gold remains very dependent on movements in the dollar and yields, both of which have been providing some headwind this week. While lower energy prices may ease inflationary concerns, Friday’s US producer price report may provide the next round of price volatility. Key resistance at $1808 with support below $1765 at $1735.

Crude oil (CLF3 & LCOG3) suffering a three-day decline of close to 9%

Brent closed below $80 on Tuesday for the first time since early January with WTI trading near $74on fading risk appetite as the attention turns to 2023 and increased worries about an economic slowdown hurting demand. The slump comes against a backdrop of low liquidity with Brent open interest falling to a seven-year low, thereby stoking volatility. After five months of cuts the EIA upgraded its 2023 production saying it could average a record 12.34m barrels per day. The API reported another big draw in crude oil stocks while China imported 11.42 million barrels per day last month, up 12% from October and highest since January. Overall, however, the market is undoubtedly going through a soft patch with time spreads softening as the spot price falls faster than prices further out the curve.

US treasuries drop again, as safe-haven appeal comes and goes. (TLT:xnas, IEF:xnas, SHY:xnas)

US treasury yields at the long end of the curve erased much of the previous day’s rise as risk sentiment was broadly weak yesterday, suggesting a safe-haven appeal. The 3.50% area remains the pivotal one for the 10-year benchmark yield. The 2-year US treasury yield was sideways, meaning that the 2-10 yield curve hit new cycle lows around –84 basis points.

What is going on?

EU to move forward with cases against China on trade policy at the WTO

The first case is related to China restricting Lithuanian exports, a move that came after Lithuania allowed Taiwan to open what is arguably an embassy in the country. The other case revolves around Chinese treatment of patent holders.

Apple set to postpone the roll-out of its first EV

The company will postpone the launch of its first EV to 2026 (thought to be about a year later than originally intended), according to “people familiar” with the situation cited by Bloomberg. The original intention was for the EV to be fully autonomous, but the realization that this is an insurmountable engineering challenge for now has resulted in the redesign, which is now set to include human controls.

TSMC plans to more than triple its investment to $40 billion in building plants in Arizona

In an equipment installation ceremony at Taiwan Semiconductor Manufacturing Co’s (TSMC) first microchip production plant in the US, which President Biden attended, TSMC Chairman Mark Liu announced that the Taiwan chip foundry is building a second production plant that will make 3-nanometer chips in Arizona. The additional plant will bring TSMC’s previously announced investment of USD12 billion to USD40 billion. TSMC expects the second facility will begin operation by 2026. Also attending the ceremony were CEOs from Apple, Nvidia, AMD, Applied Materials, and Lam Research. The additional investment is a boost to President Biden’s plan to bring the semiconductor supply chain, in particular the capability to fabricate high-end chips, back to the U.S.

CBOT Wheat (ZWH3) trades near a 14-month low

Despite floods Australia is expected to produce a bumper year of crops including record wheat production in the current financial year, the government said on Tuesday, despite the impact of widespread flooding in the country's eastern region. An announcement that will pose even tougher conditions for US exporters already dealing with reduced competitiveness from the strong dollar and robust supplies from the Black Sea region. On Tuesday, the CBOT bellwether wheat contract dropped as low at $7.23 to the lowest level since October 2021. Focus on Friday’s WASDE report which will publish the US governments latest projections for production and stocks.

Sugar prices likely to remain supported as India sees output drop 7%

India, the world’s biggest producer and second largest exporter has said its output is likely to fall 7% this year as erratic weather conditions have cut cane fields. A reduction may, despite global economic growth concerns, lift prices and allow rivals Brazil and Thailand to increase their shipments. Sugar (SBH3) traded in New York recently surged higher by 17% before spending the past couple of weeks pairing back some of those strong gains. The biggest short-term risk remains the potential for speculators reducing exposure ahead of yearend. This following a three-week buying spree to November 22 during which time the net long increased four-fold to 202k lots, the strongest three-week period of buying in more than four years.

Toll Brothers beat on margin and home sales

The high-end US homebuilder delivered strong earnings yesterday with revenue at $3.7bn vs est. $3.2bn and EPS of $5.63 vs est. $3.96. The gross margin outlook for the current quarter came out at 27% vs 27% expected as pressures in building materials are easing. One negative trend for the homebuilder was the backlog which shrunk to 8,098 vs est. 8,814.

Australia: Q3 GDP softer than expected, mining majors rally, then retreat

Australian economic improved in the third quarter of 2022, but was weaker than expected at +0.6% QoQ and 5.9% YoY (vs. +0.7%/6.3% expected). The Australian market fell on the day, with mining companies Fortescue Metals, Champion Iron, BHP and RIO testing six-month highs before selling off later in the session. In other parts of the market, insurance companies continued to shine, as they traditionally do when interest rates are rising. QBE and IAG rose almost 2% today taking their YTD gains to over 14% each.

China’s exports shrank 8.7% Y/Y in November

In USD terms, China’s exports declined 8.7% Y/Y in November, much weaker than the -3.9% consensus estimate and -0.3% in October. The fall in exports was broad-based across destinations, U.S.  down 3.8% Y/Y, European Union down 9.3% Y/Y, and Japan down 4.6%. Exports to ASEAN slowed to a 7.7% growth in November from 19.7% in October. Imports, falling by 10.6% Y/Y, also below expectations.

What are we watching next?

Bank of Canada meeting today – market divided on anticipated hike size

The Bank of Canada has shown considerable flexibility in its tightening path, having hiked 100 basis points in one go back in July, followed by a 75-basis point hike in September and 50-basis points hike in October. With that pattern in mind, the market is divided on whether the BoC will hike 50- or 25 basis points today, with market-pricing leaning for the smaller hike, while the majority of surveyed analysts are looking for another 50 basis points, which would take the policy rate to 4.25%. Regardless, the market is pricing that the Bank of Canada is nearing the end of its hiking cycle, projecting a peak rate next year of sub-4.50%.

China opening up trade – has it run out of steam?

The latest news in China of a further easing of curbs on activity relative to Covid saw equities in Hong Kong and mainland China posting marginal new highs before rolling over badly and then closing near the lows of the session, suggesting that after a torrid 35% rally off the lows, in the case of the Hang Seng Index, the further potential for this story to continue to support a positive outlook may have run out of steam. The highs overnight in the Hang Seng were within a few points of the 200-day moving average.

Earnings to watch

Today’s US earnings focus is Campbell Soup which is an US processed food manufacturer of meals and snacks. The company is expected to deliver 9.5% revenue growth for the quarter that ended in October suggesting substitution effects as middle income families are shifting into lower priced options.

  • Today:  Brown Forman, Campbell Soup, GameStop
  • Thursday: Broadcom, Costco, Lululemon, Chewy
  • Friday: Oracle Corp, Li Auto

Economic calendar highlights for today (times GMT)

  • 1500 – Canada Bank of Canada meeting
  • 1530 – EIA's Weekly Crude oil and Fuel Stock Report
  • 2000 – US Oct. Consumer Credit
  • 2130 – Brazil Selic Rate Announcement
  • 0001 – UK Nov. RICS House Price Balance
  • 0030 – Australia Oct. Trade Balance

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 (

40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

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. Android is a trademark of Google Inc.

©   since 1992