Global Market Quick Take: Asia – July 27, 2023 Global Market Quick Take: Asia – July 27, 2023 Global Market Quick Take: Asia – July 27, 2023

Global Market Quick Take: Asia – July 27, 2023

Macro 7 minutes to read
APAC Research

Summary:  US equities were eventually lower after a choppy session while Treasuries gained as Fed meeting lacked clear signals of further rate hikes and emphasized a data-dependent approach. Xpeng ADR was up 27% on announcement of Volkswagen’s investment, and Meta’s earnings beat saw it surge 7% in post-market. Dollar weakened, with gains in JPY and EUR which may be tested with ECB meeting today and BOJ tomorrow.

What’s happening in markets?

US equities (US500.I and USNAS100.I): S&P500 flat after the FOMC, Boeing surges on strong jet orders

After fluctuating between gains and losses to digest the message from Powell in the post-FOMC news conference, the S&P500 finished Wednesday nearly unchanged. The data-dependent stance was offset by Powel’s comment on the stickiness of inflation. The communication services sector topped the performance within the S&P500, paced by a 5.8% gain in Alphabet (GOOGL:xnas) after reporting strong results the day before. The Nasdaq 100 slid 0.4% as Microsoft (MSFT:xnas) declined 3.8% on slower cloud-computing growth.

Union Pacific (UNP:xnys) jumped 10.4% after the rail transportation company announced a change in CEO. Boeing (BA:xnys) surged 8.8% after reporting revenue, earnings, and cash flows beating estimates and a strong orders book. Coca-Cola (KO:xnys) added 1.3% after raising full-year guidance. Meta Platforms (META:xnas) surged nearly 7% in extended-hour trading after reporting Q2 results beating estimates and upbeat revenue guidance.

Treasuries (TLT:xnas, IEF:xnas, SHY:xnas): yields dip modestly after the Fed decision

Treasures gained modestly in prices from the front end through the 10-year following the Fed’s well-anticipated 25bp hike and a statement with minimal changes from the previous one. Both the 2-year and 10-year yields shed 2bps to 4.85% and 3.87% respectively. The probability of another 25bp hike in 2023 fell to 47% from 50% as indicated by the OIS swap market.

Hong Kong & Chinese equities (HK50.I & 02846:xhkg): markets consolidate

Hong Kong equities consolidated as selling pressure emerged following the dramatic rally on the previous day. The Hang Seng Index declined by 0.4%, while the Hang Seng Tech Index fell by 0.9%. China property, Internet, and EV stocks were among the laggards, with Country Garden Services (06098:xhkg) plunging 7.7%, and both Country Garden (02007:xhkg) and Longfor (00960:xhkg) shedding more than 3%. XPeng (09868:xhkg) plunged 6.9% and was the biggest loser in the Hang Seng Tech Index during the Hong Kong session but the share of the EV maker’s ADR soared 26.5% after Volkswagen announced a USD700 million into the company and a plan to jointly develop EVs in China.

Conversely, Macao casino operators, led by Sands China's (01928:xhkg) 3.7% gain, performed well. This came after Macao reported a record hotel occupancy of 89.1% in June since the reopening of China. Meanwhile, Southbound flows saw net buying of HKD 7.8 billion.

In the A-share market, the CSI300 Index registered a 0.4% decline, mainly influenced by declines in the media, telecommunication, and automotive sectors. On the other hand, there were gains in property, steel, and construction materials sectors.

FX: Yen outperforms as yields drop

The US dollar was modestly lower with Fed Chair Powell’s data-dependency comments being taken as dovish by the markets on expectations of disinflation. Lower Treasury yields brought some gains to Japanese yen, with USDJPY testing the 140 handle from ~142 at the start of this week. BOJ meeting tomorrow could upset those expecting a tweak and could bring back yen weakness. EURUSD reversed back higher to 1.11 overnight but ECB meeting today will have a tough job of maintaining its hawkish rhetoric. AUDUSD slid lower to 0.6730 on softer-than-expected Q2 CPI but was back at 0.6750+ in Asia morning today.

Crude Oil: inventory data upsets oil bulls

Crude oil prices reversed some of the recent gains overnight after crude inventories fell less than expected. EIA’s weekly inventory report showed US commercial stockpiles fell by 600kbbl last week. However, the losses were limited and gains returned in the Asian session as inventories at Cushing, the pricing point for WTI, remain near their lowest levels since May. The Fed decision to hike rates by 25bps was as expected and the crude market will likely remain focused on supply tightness for now. ECB meeting will be on watch today and US Q2 GDP and PCE data also on the radar.

Gold: Fed pause signals underpin

With Fed Chair Powell leaving out any clear signals of a rate hike beyond July 25bps that we got yesterday, Gold extended its recent gains to $1978. Minor resistance at $1980 and clearing that will bring the next test at $1998 in focus which is the 61.8% retracement from the June lows. Even if no more Fed rate hikes were to come, real yields will continue to expand due to disinflation, suggesting the path for Gold may be less clear until clear Fed rate cut signals appear. Gains in equities are also reducing the safe-haven appeal of the yellow metal.


What to consider?

Fed hiked 25bps as expected, further rate increases to be data-dependent

The Fed hiked rates by 25bps to 5.25-5.50%, as expected, with the statement nearly unchanged from the June FOMC. Powell has emphasized a data-dependent approach and is not ruling out the possibility of a rate hike in September. But that will mean taking into account two more CPI reports and two non-farm payroll reports. With base effects colling off in H2, it is likely that inflation could see some modest upsides, but Fed will likely be cautious of that. Powell noted that full effects of tightening are yet to be felt. He still does not expect inflation to come back to 2% until 2025, but mentioned that if we see inflation coming down credibly, the Fed could move down to a neutral rate level and then below neutral at some point, albeit he pushed back on any rate cuts this year. Upside risks to inflation from economic growth were also noted. Market is now pricing in only 20% chance of a September rate hike and a 40% chance for November.

Meta reports strong revenues and upbeat guidance

Meta reported Q2 revenue of USD32 billion, an 11% increase from Q2 last year and 3% above consensus. GAAP EPS grew 21% Y/Y to USD2.98, 2% above consensus. Total advertising revenues of USD31.5 billion, a 12% Y/Y increase, were better than expectations. Excluding restructuring changes and others, the Adjusted EPS rose to USD3.95 versus the consensus estimate of USD2.87. The company also raised the sales guidance for Q3 to USD32-34.5 billion, better than the USD31.2 billion expected by analysts.

Australia Q2 CPI softer than anticipated

Australia’s Q2 CPI released yesterday was softer than anticipated, both for the headline and key core numbers. The headline Q/Q came in at 0.8% and Y/Y at 6.0% versus 1.0%/6.2% expected, while the “trimmed mean” figures were 0.9% Q/Q and 5.9% Y/Y vs. 1.1%/6.0% expected, respectively. The AUD traded lower in the wake of the figures as front-end Australian yields dropped.

ECB meeting: A more pronounced dovish shift could weaken EUR

The European Central Bank is widely expected to deliver another 25bps rate hike at its upcoming meeting on Thursday and that would take the deposit rate to 3.75%. However, ECB members have started to turn somewhat cautious in their outlook beyond the July rate hike. Economic data out this week, particularly from Germany has also signalled caution. But market has been pricing in another rate hike beyond July with a 50% chance. The June meeting encompassed comments like there was still “more ground to cover” and the ECB is “not done” on rate hikes from President Lagarde. Absence of such statements may mean a clear dovish shift and lead to market repricing the ECB path lower. Since the prior meeting, headline inflation has cooled to 5.5% from 6.1%, however, the super-core metric ticked higher to 5.5% from 5.3%. Two more inflation readings for July and August will be out before the September meeting so a data-dependent approach may be highlighted, which will trigger the market to expect that we are nearing the end of the ECB tightening cycle. A close below 1.10 in EURUSD could mean a stronger EUR reversal may be in the cards.

Coca-Cola Q2 results beat, volume momentum picks up in Q3

Coca-Cola’s Q2 revenue came in at USD12 billion, increasing 5.7% Y/Y and 2% above the consensus estimate. While volumes were flat sequentially in Q2, the Company said that volume growth had picked up every month in Q3. It raised the full-year revenue organic growth rate to 8-9% from the previously guided 7-8%. For Q2, Adjusted EPS grew nearly 11% Y/Y, beating the consensus estimate by 8.5%. The management lifted the full-year EPS growth guidance to 9-11% from the prior 7-8%.

Volkswagen invests in XPeng

Volkswagen said it is investing USD700 million into the Chinese new energy vehicle maker XPeng and will jointly develop two mid-size electric vehicle models with XPeng. The German automaker plans to eventually hold a 4.99% stake in XPeng and get an observer board seat.

For a detailed look at what to watch in markets this week – read our Saxo Spotlight.

For a global look at markets – tune into our Podcast.


The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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 (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo 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 or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.